I sometimes like to flip the card for words to note the component characters and other details. One such detail is the "level", which will have notations such as "hard", "hardest", "rare!", "unknown", and so on. Does anyone have any insight into how a word's level is determined? Is there a corpus of Japanese/Chinese that is used?

I'm curious about this too!

Here's a little bit of info:

http://blog.skritter.com/2011/01/toughness-indicators-in-word-popup.html

How does toughness relate to usefulness? Surely some of the most useless characters are easy to learn and vice versa.

Wouldn't it be better to separate toughness and usefulness?

Have you read the article? Skritter's "Toughness" actually is usefulness (as it is based on frequency in articles/text books).
For example take "凸" (tu1) which is a very simple character. It still has toughness "harder", because it is hardly used.

Right, it would have been better to rename it until we actually adjusted the scores to include the data on word-specific retention rate gathered from Skritter users.