I've only recently played this for the first time. Here are some of my thoughts
note I'm using starman.net's official names for the characters Ninten, Ana, Loid, and Teddy.
Heavily abuse bread crumbs. For example, use bread in front of the Podunk Mayor's building, and then use the crumbs immediately after freeing Pippi. I'm pretty sure that if you teleport or go to Magicant, the crumbs will no longer take you back to your original spot.
I can drive home the peculiarities of PSI-learning with the following example. Once, while power-levelling Ana to level 8, she ended up learning 3 new PSI's after a single battle. Also, one of those new PSI's was PK Freeze beta, even though she still didn't know the alpha version.
Also, let me dash any hopes of a Ninten-Loid-Teddy party if you reach Ellay without Ana in your party, the crowd won't let you dance (they damand a trio), and Teddy therefore won't appear to spar and then join you.
Now, for the levelling
Ninten needs to be at level 25 to fight the dragon, which requires (according to Starman.net) a total of 13583 experience points. This can be reached by defeating 28 red snakes (500 XP each) -- 55 if one other ally is alive, 82 if two allies are alive. (note that I'm not accounting for any other battles, like Starman Jr.).
Here are some of the party options as I can see it
1) Just Ninten and Loid
- level up Ninten to 29 so that he knows Lifeup beta, and level up Loid until he has about 80 HP
- during the waiting phase of the Giegue battle, set up a PSI shield on both characters
- during the singing phase, Ninten alternates between himself and Loid with Lifeup beta, while Loid sings away
- skips Snowman and Reindeer station altogether
2) Ninten, Loid, and Ana
- Ninten at level 25 is fine, get Ana to level 22 for lifeup pi, and Loid to 80 HP
- after shielding everyone, Ana repeatedly used lifeup pi (stopping occasionally to use a PSI Stone) while the other two sing
3) Ninten and Ana (and ignored Loid)
- Ninten at level 25, Ana with 80 HP, Loid at 1
- same as method #1, but Ana heals while Ninten sings
- since Loid isn't levelled, need fewer snakes
4) Ninten, Ana, and Teddy
- after killing EVE and reading the tombstone, teleport to Ellay and get Teddy.
- Teddy's starting level is good enough -- use method #2's strategy
- save time not needing to level the third character, but waste time dancing in Ellay