I'm pretty sure if you've got fusou, you can progress regardless of your DD and CL levels. The only time DD and CL levels matter is 3-2 I think, since that map, to clear it you can ONLY use DDs. Level doesn't increase much, aside from like evasion and stuff. Kai-ing them on the other hand does improve a whole bunch, so if you're looking for a stopping point, I'd say once they're all Kai'd. Or kai ni'd, depending on who you're leveling and how much time you feel like spending on this.
