Chimerawizard summed it up nicely. :)
Here are some examples of situations and how your pet level will end up:
1) You're a level 99 BST with magian axes or some other weapon that is
iLvl < 100. You have
5/5 Beast Affinity merits and augmented Monster Gloves +2. Your pets are going to be
level 99. This includes the new jug pets, they'll be level 99 too.
2) You have Icoyoca/Faizzeer/Forefront Axe/Hunahpu/Kerehcatl in your main hand (all weapons are
iLvl > 105), but you have
0/5 Beast Affinity Merits. FaithfulFalcorr (or Merle/Dipper/Lucky/etc.) will be
level 99 in this case also. However Dortwin/Malfik/Xerin will be summoned at their natural cap (103/104/105, respectively).
3) You've got Brethren Axe (
iLvl 113) and
5/5 Beast Affinity merits and augmented Monster Gloves +2. Falcorr/Dortwin/Malfik/Xerin will all spawn at
level 113.
4) You've got Hunahpu (
iLvl 115) and
5/5 Beast Affinity merits and augmented Monster Gloves +2. Falcorr (et al) will spawn at
level 114, but Dortwin/Malfik/Xerin will all be
level 115.
5) You've got Kerehcatl (
iLvl 119?) and
5/5 Beast Affinity merits and augmented Monster Gloves +2. Falcorr (et al) will spawn at
level 114, Dortwin will spawn at
level 118, Malfik and Xerin will spawn at
level 119.
I'd comment more on HeraldHenry, but haven't been able to test as much due to lack of plasm/lack of Kerehcatl. ; ;
I hope that clears it up.