It's all leveled. You'll need to upgrade weapons and gear for the upgrades to be effective, but it doesn't change killing potential in standard crucible. Iron Banner, on the other hand, takes all levels into account, so year one gear will be a bad idea next time IB comes around.
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That's great, at least I can gear up for crucible immediately, without to wait to get lucky finding the weapons I want. Thank you for the quick answer.