Yeah, I had interpreted it to mean that you used your combined levels to determine if you got Inspire Competence, Greatness, and Heroics and probably Song of Freedom and Suggestion/Fascinate, but not the scaling level-based effects of those songs (so you can only ever inspire greatness in one person, your inspire courage is only a +1, and so on). But I will be the first to admit that (a) it's open to argumentation and (b) YDMMV. But I think it's definitely no slam-dunk in terms of the rule interpretation. I was just hoping that there was a ruling in an errata or some other source somewhere which was clearer.
It's actually REALLY annoying how many different ways there are to advance bard abilties. Virtuoso does one thing, Lyric Thaumaturge another, Song of the White Raven yet another, and Harmonic Knight even another. Initiate of Mliliililili is just another one of those things. I guess the game designers realized that "hey, bardic abilities are handy, we'd love to give them to people without making them have to be a bard".
As an aside, though, I only find Inspire Courage compelling when it's combined with Song of the Heart, a Badge of Valor and the Inspirational Boost song. With those options on the table, and the normal IC scaling (or better yet, a vest of legends at times) you can really affect the combat. Without those around, Inspire Courage is only good for slowing down combat because everybody forgets to add in that dinky +2/+2 that they have.