Oh, If so, that's great. I'd assume then that any titan spawned after the primary titan was built then would spawn at the primary's level?
Okay, I think I've figured out how all of this works now. Spawned titans are always at level 1, period. Built titans will take the same level as the highest titan you've ever controlled, even if its a spawned titan, so its the process of building a titan that gives it its levels, not anything with the titan itself.
This is wonderful news. I wonder how the AI would handle not being able to build Titans, if they would all spawn by ability... Perhaps they would focus more on capital ships and frigates? Or just flat out die and rot?
I don't know, though I have a couple of different ideas of how to set this up. The obvious is as you said just to completely replace building titans with spawning them, in which you get around the keeping levels thing completely and they basically act like capitalships.
If the AI doesn't like that, you could try keep the titans as they are, but having a separate late level (say 6-8) tech that gives players the ability to spawn titans as well. Thus everyone's first titan is built normally, allowing the AI to still function, but allows human to get multiple titans if they have a lot of resources late game. The only thing is the game won't let you rebuild a titan if you currently have one, even if it was spawned, so if your first/higher level titan gets destroyed you won't be able to rebuild it at its full levels until all of your titans are destroyed. This may not be a bad thing though, it gives a bit of reward for players who only build one titan but use it well, and really makes multiple titans a luxury you should only use for hasting the finishing blow after you've won the main battle.
The third way is for humans get all of their titans via ability but give the AI a unique research that allows it to get access to the normal titan factory. This should keep the AI more competent anyways as it probably wouldn't know how to use multiple titans to its advantage, so the titans retaining levels is a bigger bonus. Humans will always have to start their titans from level 1 but can build multiple, which is something they are better able to use.