I think the key is how you determine whether someone is level 1 or level 2. Is that information help elsewhere that you can import in or can you manage that data just within LDSD? I'd avoid using groups just for the sake of this because it might have an effect on other areas. For example people might end up being members of more than one group, which is OK, but you'd need to make sure they are in the right one at the right time.
At first glance I'd say use a response agreement which uses the attribute saying Level 1 and Level 2 to allocate the correct response level.