Well I tried getting through Stormfist and Iona's dungeon again, and once again couldn't do it below level four. I feel like getting the free point in Restoration is a must, but healing both patients takes you up to level 2. Then I think rescuing Lanilor (for his semi-affordable potions) and getting the 2nd pyramid is a must, and those two things take you close to level 2 (you get xp for opening the catacombs, and more for getting the pyramid. I skipped getting George's herbs.

I found that you can't ignore getting the Escort for the Healers quest (if you want to do the Army quests for your invitation) because otherwise you won't be allowed to see Gen Alix. Then I think there's no way to get the two army quests without completing the Escort quest (more xp for that). I believe completing the escort quest bumps you over to lvl 3. Completing both army quests then reporting back to Alix gets you quite close to four, then at Stormfist, 2-3 quests in should bump you past lvl 4.

It would take some sacrifice, but I'm sure Lanilor can be skipped, relying only on the other healers and George (who tend to have a limited supply of minor potions) and what is found at the overturned cart. You could also skip getting the pyramids since you lose them right away anyway at Stormfist, but doing so would make the Army quests a bit more difficult and costly. Also I don't know if that would have any effect on the game since the imp takes them both, and you'd only have gathered one. Heck, the patient healing could be skipped too if you're willing to live without the free point in Restoration (also the opportunity to get it would be lost after you complete the escort quest). I did pick up pleny of bread if I needed to "top off" after a fight or a level-up (I put all my points into constitution).

I figure you need at least 4-5 minor shadows to get through Iona's Dungeon (though with all my preparation, it was a lot easier to get through this time knowing the general route). I also got the idea to mix up five minor elixers and drinking them in the dungeon; this seemed to work like a charm, the fire arrows that were devastating the last time were much more manageable.

So skipping Lanilor, the two patients, and the pyramids might let you slip out under level 3, though the 3500 xp you get from escaping the dungeon might push you over anyway.

As I said before, the next step (the Succubus) presents quite a roadblock. I did three reloads in Ars Magicana trying to get a Poison Weapon skill on something before giving up. I figured items with a +1 skill are pretty hard to come by anyway, but not only that, I don't have the STR and AGI requirements for probably 75% of the items available at Ars. I really wanted to avoid doing it with Scorpion Traps (which would also require going up to lvl 5) or a frost sword (which would only be a viable option if all the ghosts and mummys were carefully lured away first) But I think I'd still have a summoned thing to deal with...so I'm not sure about the next step.