The best place to level up in ff7 is the swamp, its 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 other enemies in the swap (the jester i believe)

If that isn't preferred, where you currently are I would recommend Mideel area, the spirals and green enemies (can't remember their names, found in forest) 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 or whatever taped down, turbo might be needed). you can also auto level on certain beachs by holding down, but I can't remember which enemies you will face.

Hope this helps