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Correct, to set a certain level you must be part of that level.
If that's an issue you can create a more "dynamic" issue security level by setting it based on a custom field with an automation or with a group picker field.
especially the last option here is an interesting one. it allows you to pretty much create a single level and depending on a user or group picker field you can show/hide the issue
I would say yes, but you should test it out to be sure. First though, the user must have the ability to Set issues security in the Permission Scheme.