I'd also like to point out that resting at the inn to restore HP is not a good move. It's better to rest 1 reserve Priest (perhaps an Elf Priest that has level 6 spells) than several wounded folks. Even lower level reserve Priests help immensely in this regard.
I think I remember John saying that the game doesn't use experience to level characters; instead, a character has a chance to gain a level when they hit, are hit, or damage the enemy or disarm a trap based on their race, class, their level, the level of the dungeon, and the monsters' level. Something like that.
- Gio