Apparently CompressionLevel option was removed since there was no way to tell other peer its value with SSH2. However it would be useful to have it back and just use it for the sender. Indeed the decompression operation on the receiver is the same even when changing the compression level (the receiver won't notice a change of compression level on the sender). Also the decompression is a lot faster than the compression and independent of the compression level. This way every peer should be able to set its compression level, according to its wanted CPU usage. For example a client may choose a higher compression level, while a server with many concurrent connections may want to use a lower compression level. Eventually CompressionLevel 0 should also be allowed, it should mean it is able to receive compressed data, but only sends uncompressed data.
See also bug #2888.