I am level 470, and I am showing in my fight list people all the way up to level 866. Is it supposed to be that way? I understand the levels of the fight list get spread out as you move up, but 400 levels? That's a little insane. No matter how I would have played and used my skill points at Level 470, there is no way I could fair well in a fight with a level 866. You are easily talking a 2000 skill point difference.
After a certain level (I think around 300 odd, I forget) the fight list opens up to all players, so yes, you will likely have DILLIGAF and POG and the other players around or over the 1000 mark too. You're going to have to get used to it, sorry!
Just because they show on your fight list, doesn't mean you show up on theirs. So be careful who your attacking because if there a lot higher then you, odds are they couldn't have attacked you without you attacking them first.