The term "levels" of heaven and hell to describe the degrees of punishment or reward reflects the literary imagery of Dante Alighieri’s Divine Comedy more than the language of the Church. "Degrees" of perfection or punishment is the proper term. The degree of perfection of the beatific vision granted to the just is proportioned to each one’s merits.
The . . . Council of Florence (1439) declared the souls of the perfectly just clearly behold the Triune and One God as he is, but corresponding to the difference of their merits, the one more perfectly than the other. The Council of Trent defined that the justified person merits an increase of the heavenly glory by good works. (Ludwig Ott, Fundamentals of Catholic Dogma, 479)
Scriptural support may be found at: Matthew 16:27; 1 Corinthians 3:8; 2 Corinthians 9:6; 1 Corinthians 15:41. The punishment of the damned is proportioned to each one’s guilt.
The Union Councils of Lyons and of Florence declared that the souls of the damned are punished with unequal punishments . . . This is probably intended to assert not merely a specific difference in the punishment of original sin and of personal sins, but also a difference in the degree of punishment for personal sins [cf. Matt. 11:22; Luke 20:47]. . . . St. Augustine teaches "In their wretchedness the lot of some of the damned will be more tolerable than that of others. Justice demands that the punishment be commensurate with the guilt." (Ott, Fundamentals, 482)
Ludwig Ott’s book can be purchased from http://shop.catholic.com.