No, they shouldn't cast spells above their level, but it all depends on how your spell set is set that the NPC is using.
For the avatar, maybe you can use this link:
http://www.eqemulator.org/forums/pro...?do=editavatar
If the link doesn't work, you should be able to just go to User CP and then select Edit Avatar on the left side menu there. Not sure offhand if it is only an option for members with special status though, as I never really see anyone else with them.