The best place to level up in ff7 is the Swamp area in the Northern Crater, it is in the final dungeon of disc 3, but is by far the best place to level. If you are leveling to fight the optional weapons (Ruby, Emerald, Ultima) then i would just progress until you can level here. The enemies you want are Movers, they have little (0?) exp but insane AP and are easily killed, and Magic Pots give great exp and ap, but require an elixir to kill (must give it to them first). You can steal elixirs from Gighee Which is also found in the swamp.
General method in the swapswamp is Steal Elixirs from Gighee (Or just use W-Item Duplication on Elixirs), use Elixirs to kill Magic Pots. Also, while hunting these two be sure to kill Movers great AP, and just run from everything else. This place is so good I usually end up putting my save crystal here.
If that isn't preferred, where you currently are I would recommend Mideel area, the Spiral and Head Hunter (found in forest) enemies give good exp and ap for that part of the game.
If you want to auto level you can fight the Midgar Zolom (Just stand inside the Midgar Swamp with X taped down, turbo might be needed). You can also auto level on certain beachs by holding down, your character will run up and then down the beach in constant motion. Again having X taped down will auto kill monsters. For these methods you might want to consider Sneak Attack materia in your setup.
Hope this helps