Allrighty...being a non-frequent asylumer and not nearly as well versed in Myth Mythology as you boiz, I'll probably be pelted with flak for this idea, but tell me if it's all all possible...
What if Balor wasn't the leveller?
Some things point to this...like a comment I saw somewhere that said Balor appeared before the end of the Wolf age, and the fact that Alric seemingly screwed over the cycle. MAYBE one of the fallen was the leveller, or the leveller came and went...
Well, load up dem flak cannons and waste me, people!
DM :)