The leveling system does normally support part of the weight of the car. The level control valve has a minimum pressure it maintains in the levelling system; it will not let the pressure fall below that minimum value regardless of the position of the control lever on the valve. The shop manual states that a minimum pressure is required to provide adequate damping. In other words, no pressure = no shocks in the back.
If you disconnect the valve and move the lever below horizontal, the rear of the car will come down as much as it's going to come down. However, if you then bleed the system (via the nipple atop the control valve) the rear will come down another inch or so. This does not imply a problem - it's simply the ride height added by the minimum pressure.
I adjusted my wagon so the level control system doesn't add any pressure until a few hundred pounds have been loaded into the back of the car. The ride height is plenty high until that point.