@FonzGemini.
You're partially correct. While you don't have to necessarily level up all of your characters, due to the fact that they gain 3/4 of the normal EXP that your party gains, it will help you against the first form of the Last Boss.
It can be worked around though, if you don't have a strong backup party, mainly by loading your main party with completely master Enemy Skill Materia and a Quadra Magic - Ultima combo on your main magic user, that will take care of it and put you through to the most epic battle of the game (if you're not into the optional bosses ;) ).
Current PC Build
CPU - i7 8700K 3.7 GHz (4.7 GHz turbo) 6 cores OC'd to 5.2 GHz with Watercooling (Hydro Series H110i) | MB - Gigabyte Z370 HD3P ATX | Gigabyte GTX 1080ti Gaming OC BLACK 11G (1657 MHz Boost Core / 11010 MHz Memory) | RAM - Corsair DIMM 32GB DDR4, 2400 MHz | PSU - Corsair CX650M (80+ Bronze) 650W | Audio - Asus Essence STX II 7.1 | Monitor - Samsung U28E590D 4K UHD, Freesync, 1 ms, 60 Hz, 28"
