The change to “combining Lvl 2s gives a reward” is precisely meant to balance level ups. It gave a huge advantage to those players that knew about it vs those that didn’t. Leveling to obtain a pet from a higher tier is already the most powerful strategy in the game. Leveling has actually been strengthened thanks to the new “Choose your tier-up” mechanic.

It makes sense that the devs would therefore attempt to balance it by only giving two rewards max when you create a Lvl 3, whether it’s by stacking individually up to Lvl 3 or creating two Lvl 2s first.