If you are going to play the game properly, and not get rushed the best way to level your merc is to hire one from which ever act you choose and let him play with you. If he dies, revive him, this way he shouldnt fall too far behind you in the level department.
If you do get rushed i suggest taking your merc into hell baal runs and hope that he doesnt die too often. You could also run around and let him kill the bulk of the monsters.
As for gear, a good idea is to Mf until you get the right gear, or equipment to trade for your merc's items.