At which level (D or E) should I apply for an advertised faculty position in Australia?
It is my understanding that when a position is advertised so broadly, i.e. D or E, they are likely looking for someone really big. That being said, I think they are likely looking for someone at the level E, but would consider a strong candidate at level D. 

If it were me, I would evaluate my qualifications and fit with both D and E positions honestly, and then put all my effort into whichever feels like the best fit.

If the only motivation to try for E is salary, and you probably fit better for D, then you are likely risking both.