According to the wiki, experience is distributed based on experience totals.
To paraphrase, consider mob experience to be a big pie. The pie is divided up proportionate to each member's current experience total. By experience total, I mean all of the experience the character has ever gained. So a higher level character gets a bigger piece of the pie than a lower level character of the same class and race.
To give an example, lets say 3 people form a group, and their totals are 100, 100, and 150 experience ever gained. They kill a mob who yields 7 experience (after taking zone xp multiplier into consideration). The two 100's would get 2 xp each, and the 150 would get 3 xp.
Hybrids and some races take more or less experience to get to the same point. The extreme examples are halfling warriors, who require 0.95 * 0.9 = 85.5% experience to level, and troll/iksar sks, who require 1.2 * 1.4 = 168% experience. When grouping with these characters, if you are the same level as them you will get a bigger or smaller piece of the pie than you otherwise would.
The difference in experience between levels tends to be bigger than the difference between hybrids vs non hybrids. To quote straight from the game mechanics page: at the experience total 10,000,000, a human monk is level 20, a halfling warrior level 22, and a troll sk level 18. So as you can see, if you were a 20 monk, you'd much rather group with an 18 SK than a 22 monk because you'll get more experience with the SK.
As far as minimum level for group experience, take the lowest level and multiply by 1.5 (round down) or highest level and multiply by 0.667 (round up). A level 20 can group up to 1.5 * 20 = 30, and a level 30 can group down to 0.667 * 30 = 20.
The lesson to be learned from all that is: group with people who have similar xp totals. Try not to group with too-much higher level players, especially not hybrids, but don't kick a hybrid out just for being one, especially if they're a little lower level than you.
I don't know what determines whether you get xp from a mob or not while in a compatible group though. Sometimes I get xp from greens in groups, sometimes not. I don't know how it's decided.
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