Just as an update to this... I got home from work today and tested.

I had a lvl 20 priest on my main account and 4 slaves with a combined 32 levels to hand out as well as a lvl 28 priest on another account to hand out levels with.

I gifted 8 levels to the 20 priest to bring him up to 28 and then gifted 32 levels to him and he is now 60.

So... you can gift levels from a lvl 60 character, and you can gift more than 29 to a specific toon.