The answer to your first question is yes for everyone. It doesn't matter the level of your cards as they get reduced to the max allowed in each league. For example if you created a novice tournament then anyone who enters will have any cards they use in that tournament reduced to level 1 cards for the duration of their game play in that specific tournament.
My answer is yes for your second question.
Oops, my mistake. I only noticed there was a 'novice' level to select about an hour ago.
In fact, that messes up part of what I had in mind. Because all the experienced players could join too...
Thanks for the info, @rentmoney
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You could always make it a " private " game. Players cards can be seen via peakmonsters so you could just exclude/ kick the more experience players from your tournament that try to sneak in.