Tested this the other day.
Yes, you both remain on the leve and if either of you kill something, both players get credit.
The downfall is that you are no longer in the same party and do not get SP for the other persons kills.
I just did this last night to test it out and it went something like this:
1. Me and a friend grabbed all of the R1 and R10 leves for Ul'dah.
2. Ran out to Black Brush and let him initiate the leve on 5 star. It just so happened that I had the same one so I linked it.
3. Grabbed Guardian Aspect and he dropped party.
I am on my R1 MRD at this time and the mobs were R13. I had Absorb-Acc set so I pulled with that. Easy kills, easy to keep me alive... I went from R1 to R4 on the first
kill. Something insane like 2700sp per kill. From that one leve I went from R1-R9 from less than 10 minutes work. The next leve took me from R9-R12 on another one of the R1 leves. I didn't have time to do all of the leves we grabbed before I had to log, but wow...
I can see this being an extremely easy method of ranking up at least to R20 on any DoW/M class. Kudos to OP for thinking outside the box and opening up this door to save some time!
Bleam FFXI (Retired) 75MNK/SAM/NIN/SMN/THF
Bleam WoW (Retired) 80 Druid
Golf WoW (Retired) 80 Death Knight
Tewksberry WoW (Retired) 80 Hunter
Rahana WoW (Retired) 80 Priest
Purchase and instal a bigger hard drive, at the moment my PS3 has 500GB memory which is plenty.