I'd probably go with new fretwork. Only because you can use a softer compound that will be gentler on your tools. A little Titebond on the underside of the fretwire and a fret caul will do the trick. If you are thinking of doing your own necks in future its worth getting a 12 radius caul from Stewmac . A fret press is also worthwhile as it will save you hours of time plus it will perfectly align the frets into the fretboard.
Then proceed as normal with the levelling.
