Someone didn't do a very good job balancing that system
It's a tri-Ace game. They are as balanced as someone with two inner-ear infections.
Truth be told, I prefer it to be as breakable as all hell.
My bigger concern is whether breaking the game over my knee is worth the effort to break the game over my knee rather than to just play it straight (see: SO2; sure my entire party is level 100 and I have the components for the Eternal Sphere before the tourney, but what good is any of that when the remainder of disk 1 and a good chunk of disk 2 is completely littered with unwinnable boss fights and scripted losses when I could've spent far far less time progressing normally to have achieved the same effect).
Scripted battles are so annoying, and a cheap way at "artificially" creating gameplay. Fucking FF4 was stupid for these, and a good way to not make a separate scene for the action either. FF9 had about 5 separate bouts with Beatrix, none that could be won (I think the end of Disc 1 was essentially trying to get by her). Star Ocean was a pain in the ass since it was a proper waiting game of literally running away from an over-powered foe. Baten Kaitos had a few of these too (they were particularly fond of having you survive against super-bosses too, ones you'd have to immediately "heal" whenever someone got hit).
I mean, if you don't want me to win, then just say it...
I don't understand the balance bit with Tri-Ace games. I always found it fair: if you use their in-game mechanics, you can trump your enemy, if you don't and try to grind like just about all other games, you'll probably lose. In SO2, it's a pretty smooth ride, some bosses harder than others, but the final boss will be what gives you trouble (good on the *final* boss). In SO3, the battles on the way to the big Dragon fight (Crossel?) are *extremely* difficult if you haven't made any effort to create weapons and just go along with the ones they throw you in game. VP wasn't so much hard as it was unforgiving to new folk; but those who stood through it can attest how enjoyable it is (and by god do I love it's version of a turn-based battle system what with #'d attacks and timing them). Maybe it's just me, but I love Tri-Ace's idea of in-game balance. SO4 had a uniquely punishing system: you could level to 100, or you can get 50% of the battle trophies for a unique character, prove you've given a damn in trying, then open up the level cap to 255 or whatever (you could beat the final boss within the 100 cap, but the post-game battles would ruin you). I guess I got tired with games that spoon-feed you by making a "level up" or two being what make the difference between winning and not. What fun is that?