allow same level users to edit each others posts

It used to be that they could, I take it that is no longer the case? You might find some relevant info by doing a search like this:
https://www.google.com/search?q=site%3Awww.remarpro.com%20same+level+edit+post

It was originally that way, but users wanted to limit the ability of there users to edit each others posts.
Perhaps something more finely controlled should be built, possibly plugin hooks to the permissions system.
*thinks*

I edited the user_can_edit_post function in the wp-includes/functions-post.php file in the standard WP 1.5 install to change the lines

if ( ($user_id == $post_author_data->ID)
|| ($author_data->user_level > $post_author_data->user_level)
|| ($author_data->user_level >= 10) ) {
return true;
} else {
return false;
}

to

if ( ($user_id == $post_author_data->ID)
|| ($author_data->user_level >= $post_author_data->user_level)
|| ($author_data->user_level >= 10) ) {
return true;
} else {
return false;
}

Notice the >= in the first user level compare.

it’d be nice to have this one as a plugin?