Here are the two best places to level up.

In the Northern Crater take the first left then go up. Go through the first room that you come into. Now in this room just walk around and you'll fight two great enemies. The first are magic pots which give you 8,000 EXP. and 1,000 AP each. They usually come by hemselves or with a partner. To kill these enemies you need to feed them an elixir( see hints and cheats). Also in this room you'll find a rare threesome( note Jester and his parents). They're called Movers and they give you 2,400 AP for the three of them and 160,000 gil( 180,000 with gil plus materia). The only bad part is they give you no exp. points.

The next best place to level up is in the forest outside of Mideel. Here you'll fight Head Hunters who come in packs of three or four. They give you 280 AP or 320 AP. This isn't a whole lot but you fight them every few steps, they die against flash, and with the right weapons it can turn into a ton of AP points.

Also on the shore near Mideel you fight See Worms. With Gil Plus Materia they'll give you 10,000 gil a pop. As the song goes "Not to shabby".