Being one of the earliest episodes, I've watched it numerous times, and of the old ones, it's one of my favorites. It was much more like the GB games, and showed that not everyone in the Pokeworld trains like Ash and that there are more statistics rather than will-power and goodness.
They didn't mention levels again, primarily because Ash didn't seem to care too much, and no one else seemed to either aside from the schoolkids, who never reappeared anyway.
I liked that Ash & Misty actually lost. (Well, Ash lost intially, but came back). However, I think this episode made Weepinbell & Cubone look terrible, which might be a reason they're so unpopular.