Just use level 1 - any more doesn't offer much extra compression for the greater server load it uses.
The large animated avatars and sig's, as well as the banner, makes a big dent on your bandwidth usage.
I wouldn't suggest turning off no-cache headers, as then folks would have to manually hard refresh (CTRL-F5) to get the latest posts in a thread.
EDIT: To remove no-cache headers, there is an option in the admin panel, under vBulletin Options, to turn them on and off - but once again, I would recommend NOT doing that.
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