In regards to the lights pointing up with the trailer attached. The leveling kit that was installed will actually increase that problem. Your truck has rake built into it so that the truck sits level or close to it, when a load is applied, dropping the rear end to approximately where the front was before the leveling kit was installed. Without knowing if you are overloaded, my guess is you are, I'm not sure if your truck would sit level without the leveling kit but I'm sure it would be alot closer to level and possibly keep oncoming vehicles from flashing you. Would airbags help? Yes I'm sure they would but now your trailer may not tow in a level position and I feel you are trying to fixing a problem you created with the leveling kit.
If it were me, the first step would be to get some accurate weight numbers as soon as the hitch problems are figured out and decide if I had the correct tow vehicle.