1. I'm pretty sure it's your average level, it might be only based on Squall though. GF are totally unrelated to your party, but the monsters you kill, the party members that are junctioned to the GF get exp.

2. Omega is the same level as any other monster you face. Your party's average level, I think. Try using scan on him, I haven't confirmed it but I'm pretty sure hes not always level 100.

3. Not smart. Omega levels up as you do, so if your level 100, then he will be stronger as ever. (1 million + hp to be exact.) I could tell you a strategy to beat him, if you want. And just to let you know, it has nothing to do with ultimate weapons, except Squall's, cause Leonheart and Eden do the most damage in that fight. (And maybe Rinoa's Wishing Star.)

4. Can't you only challenge him in disc 2 or something?

5. You can convert them from Giglamesh card. Thats the only way I know of.