"Grinding" the Elder Millipuf is a viable way for levelling up and I also used it. It's comparable to the Fire Guild levelling, the main advantage is that you get lot of money during the levelling (which is not the Fire Guild's training case), but you need to reenter the map again and again, so it's not as convenient as the "Enter-mashing" in the Fire Guild.
P.s. I don't thing that it's necessary to level the three main characters to level 99 in LF2. It makes the game easier, but with the best equipp all of them are very powerful and at the end of LF3 they will be level 99 anyway (you would have try hard to
not to be level 99 at the end of LF3 - it's really long

).