You know, I've been waiting for information regarding this for a long time but no beta testers have been able to show anything of value to me so far other than seeing the world and running through, so thus I must speculate.
With Elmer's recent post about the gauge I was thinking that this might be replacing the TP bar for Skill Chains as each level might have a different affect on the Skill Chain, but at this point it's just speculation. This is just speculation on my part. There is still a TP bar in the game so it may be still used like FFXI with just doing TP and it accumulating up to 300 I don't know.
Level 1 Shoulder Tackle > Level 1 Red Lotus Blade (or something like) = would equate to a level 1 stun with burning effect for maybe 5 seconds, and a magic burst opportunity would be available at this point as well.
Level 2 Shoulder Tackle > Level 3 Red Lotus Blade = would increase the stun effect however the burn effect would be more predominant than the stun effect because it would be stronger, in addition the damage would be greater due to the higher level multiplier, also the burst would have a bonus increase because of the higher level multiplier.
An alternative theory and tying into what Elmer posted, since it was based a little bit off of the Final Fantasy VI system, specifically the character Cyan, each level had certain skills associated with it. But in doing it this way that would mean that Gauge Levels would be directly reflective of Weapon Proficiency Levels and from what I could tell I didn't think that was the case.
Level 1: Red Lotus Blade
Level 2: Seraph Blade
Level 3: Vorpal Blade
In this theory, level 3 would not be available until Vorpal Blade was achieved by the weapon proficiency.
Again this is all speculation at this point, they've been very secretive about the battle system thus far, and again I haven't seen any really decent leaks that demonstrates these theories of skill chains or magic bursts. Maybe I just haven't been scouring enough content yet. But those are my thoughts on this topic.
It's not who we are, but what we do that define us. - Batman Begins