Yes, the leveling and suspension valve are one in the same. The leveling system works very slowly--no way you could feel it going up or down while shifting gears. I would say the squating indicates some weakness in the suspension components. There could be a leak, as mine does not make a hissing noise. To really test it, you should loosen the collar that attaches the leveling valve's arm to the rear sway bar and then move the arm up/down while the car is idling. I use a ruler and a fixed point of reference to measeure the travel. I believe the travel is only +/- a few inches. Running the engine faster than idle and having some weight in the trunk will speed the process. Using the described method, you need to be careful about fumes, lowering the car on yourself, etc.
Let us know how it turns out--the system is quite simple and durable, but repairs to it get really expensive. My struts were destroyed by the previous owner not changing the nitrogen cells soon enough--with no Nitrogen cushion, the struts were getting pounded with every bump... Cheers, Andrew Seidel.
85 500SEC Lorinser
83 300D Turbo