Recently, I finished Eye of the Beholder 1 with a Paladin, Ranger, Mage and Cleric.

But... finished the game with the party at lvl 7. Im somewhat...baffled?
Didnt do any of the Beholder secret quest, just the first one, put a dagger on a small space and turns into a teleport key. This is without skipping Levels with the teleport gates. I thought there were enough exp. to at least get your party to lvl 9, where the Paladin can cast at least 1 spell besides Lay on Hands, without doing the Beholder secret quests.

Im thinking to google those quests before starting the 2nd game so at least my Paladin can cast 1 spell.

Is there a recommended lvl for the 2nd game?

No, there is not. At least not without grinding respawning monsters for months. When I play the game, my characters end with about 190k xp and a paladin would need 300k for level 9.

Jesus!
And I thought grinding was going to be a cakewalk.

No, it's not. You technically can grind in a few areas, but the player is not expected to do that and the benefits are marginal at best. The game is designed in a way, that the player will be able to beat it, while progressing through it normally. Creating a well balanced party with good stats helps much more than having an additional level or two.

Actually there is at Azure level 2 , right in the beginning u use dispel magic and It’s here you’ll find the elderly elf of the stone carving. He asks to touch one of the party members. The one he touches will gain enough experience points to level up one level.