You gain levels from kills on failed missions, but do not get the chance to use level points. If you deliberately fail the second level, you can level all your guys up as much as you want, though level 3 is plenty, even level 2 all round would help.
Using the points: The first two points you should spend are 1 to ammo & 1 to cooldown, both of which give you the chance to shoot more.
Placement: Be careful not to waste moves, as you need action points left to shoot or to go defensive. Careful with barrels, they mark as a target, but you only want to shoot one when the bad guys are next to it and yours are NOT.
Weapons: The one with the bayonet can be handy, for the no heat, no ammo attack if you can get next to the enemy. In later levels, you may want to arm one guy as a sniper. The heavy marine's weapon is also ok, but better to keep him moving as quick as possible to destroy the spawn points. Once he has the grenade launcher, he is the most valuable meber of your team (if not already), and after 'nading the giant aliens, then hit any pairs or triples, when not taking out spawn points.
