Powering up your fighters, I find, is a pretty small benefit. The exp can usually be beaten pretty easily by prize fights.
The way I usually do it is this: if I'm certain I will have no use for a bronze/silver fighter (never give up a gold), I will level it a bit for the skill points, and only once it's leveling has slowed down a lot (cause it's reached a relatively high level) will I finally use it to power up other fighters.
Overall, prize fights are the best way to level, and really making the most of that will probably involve using some theonite to fight more.