Is it common in Munchkin to allow characters to reach higher than level 9
It probably is a common mistake, although it seems pretty clear to me from the rules, page 1 under Starting and Finishing the Game

The first player to reach 10th level wins ... but you must reach 10th level by killing a monster, unless a card specifically allows you to win another way.

Some amount of people must make the same mistake since it is the first rule included in their FAQ.

Important Note #1: Reaching Level 10
The general rule is that you may not reach Level 10 except by killing a monster. If you are at Level 9 and something else happens that would normally let you go up a level . . . you don't. You stay at Level 9. If you have a card or an ability that lets you mess with another player and get a level in return, you cannot play that card or use that ability.

This is all under the assumption that you aren't playing Epic Munchkin, where the rule wouldn't apply. (But, a similar 19th &amp; 20th level rule would apply instead)