I know there's a bracket system for character levels. How will this translate if you want to play an online match with a friend who's level 5 and the only character you have is a 11-20? Same goes for playing co op.

The game will never keep you from playing with friends. Also, matchmaking can be turned off to allow you to play with anyone.

You could have continued in the other topic: http://www.gamesas.com/index.php?/topic/1153919-playing-online-with-friends/
I explained the basic system there already.

To answer your question here: When you are level 11 and your friend is level 5, he'll join games of your bracket. You won't be able to play into his bracket, otherwise people would start to abuse it.

Low level players can always join higher level games with no restrictions, you're just at a bit of a disadvantage. They have also mentioned that you can make a room that does not allow the use of higher level skills, so if a level 20 player joined a game in the first block, I think it turns off all of their higher level skills.

see i love this, it will stop alot of people from boosting their rank, in halo 2 if you have 2 level 50 guys, a level 49 guy and a level 1 guy it would put you into a game with level 30 people so the guy that was level 49 could get his 50 easy

My original question was answered. To what BussDriva said, I don't think a lot of people will even care about their character level. It will be fairly easy to get a character to level 20. When I say "easy" i mean it won't take 30 matches of coming in first place to get to the cap like in Halo.