This should do it I think:
<?php
get_currentuserinfo();
$postauthordetails = get_userdata($post->post_author);
if ($userdata->user_level >= $postauthordetails->user_level) {
echo '<a href="' . get_bloginfo('wpurl') . '/wp-admin/post.php?action=delete&post=' . $post->ID . "\" onclick=\"return confirm('You are about to delete this post [bs]'" . $post->post_title . "[bs]'[bs]n [bs]'OK[bs]' to delete, [bs]'Cancel[bs]' to stop.')\">Delete</a>";
}
?>
[edit] Replace [bs]
with a backslash. This stupid forum software keeps stripping them if I add them in. ?? [/edit]
Use it within The Loop and it should only show up on posts made by someone of the same or lesser userlevel than the level of the current user.