The leveling itselfis a great idea. Having to do all these other things to catch bugs is not.. I say just let them wander. Also, ever 15 levels or so, your jar is upgraded, so at level 15, your jar can hold 2 bugs instead of one!
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I think if they would let this happen, it should be at a higher level, probably the maximum or near that. Catching 2 bugs per jar seems very op, so if it is implemented it should be an end goal.