I'm pretty sure that your level affects the spell just as if you were casting it, including determining resist chance. For example, the Ghoulbane proc's an anti-undead nuke that does level-based damage and it does indeed do the correct damage number for the level of the paladin wielding it. Also resists of the dd proc seem to be affected by relative level of the paladin and the mob, i.e. full resists by red-cons were not uncommon IME.
Note that items like JBoots and the Peggy Cloak have separate spells that are not adjusted by level rather than using SoW & the player castable Levitate spells.
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