This reminds me a bit of the academic career path. I don't think it'd be terrible to spend 5-10 years at level 2, provided that you knew you would make level 3

This reminds me a bit of the academic career path. I don't think it'd be terrible to spend 5-10 years at level 2, provided that you knew you would make level 3 (or at least had very good odds). I think the bigger problem is the uncertainty - not only are you pretty damn unlikely to make level 3, but also the selection process is kinda opaque and you don't really have a good grasp on your own specific odds. Obviously that situation is orders of magnitude worse in music, but it's why I left "professional" academia after PhD.