I would think Rank outweighs Physical level when it comes to determining the difficulty of a mob. But that is speculation.
The problem I have is my Physical Level is 2x my highest Rank for Combat Jobs - which makes party seeking rather strange.
When I was leveling Pug with a friend last week (she is Physical level 14, I was physical level 8) we are getting similar rank ups (both our Ranks for Pug is 1) but she is getting a lot less Exp than me. The Exp I am getting seems comparable, just slightly lower, to the Exp I would get if Soloed them.
But I am not sure if that slight decrease is because the party penalty (if such thing even existed) or if it is because I am 6 physical levels lower than her.
FFXIV: Karamethien Seraphus
Still a Seraph Samurai Wanna Be
Fishing AF - Complete, SAM AF - Complete, RNG Af - Complete, RDM AF - 1/6