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If a level 1 is in a 1-5 game, and the table plays 4-5 scenario, then does the level one upon successful completion receive the average rewards between 1-2 and 4-5? Also, are they entitled to the entire sheet of the items from each tier?
It was brought up and enforced that you no longer play up or play down when it comes to these things, so a level 5 can play down if it happened, and still get all items on the sheet, and their 4-5 gold. Is this correct?

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If a level 1 is in a 1-5 game, and the table plays 4-5 scenario, then does the level one upon successful completion receive the average rewards between 1-2 and 4-5?
Since they're playing out of subtier, yes.
Also, are they entitled to the entire sheet of the items from each tier?
Since they played the higher tier, yes.
It was brought up and enforced that you no longer play up or play down when it comes to these things, so a level 5 can play down if it happened, and still get all items on the sheet, and their 4-5 gold. Is this correct?
A level 5 playing in a subtier 1-2 session of a tier 1-5 scenario would receive out of subtier gold (i.e. the average between subtier 1-2 & 4-5) and access to only the subtier 1-2 items.

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Double negative statements are really unclear.
A level 1 playing at a table in subtier 4-5 of a tier 1-5 scenario would receive out of tier gold (avg. of subtier 1-2 & 4-5 gold) and availability to all items on the chronicle (minus those not found during game play).
I 'think' that's what you're stating, but again, if you avoid the double negative your question might be a little more straight forward.

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Yes, that's correct. The same for a level 5 playing 1-2 would only get the lower items and would be subject to average (out of tier) gold, right?
Where in the rules can I find this so I can prove this mistake? Others were thoroughly convinced that things changed, and I couldn't persuade them or the gm.

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That is correct.
Hmm...I'll see if I can find the language in the Guide..
EDIT:
Step 5: Determine the Max Gold for the scenario based on
the PC’s advancement rate and the subtier played. Circle the
applicable value (F). If the PC’s level is not within the subtier
played (such as a 1st-, 2nd-, or 3rd-level character in Subtier
4–5), circle the Out-of-Subtier gold value or calculate the Outof-
Subtier value for Seasons 0–4 by taking the average of both
subtiers and rounding down. Write this value beside area F
and circle it. This value represents the total gold piece value
a character may receive for defeating all enemies and finding
all treasure in a scenario. If the player is playing a non-1stlevel
pregenerated character, he may choose instead to apply
this Chronicle sheet to a 1st-level character by reducing
this value to 500 gp (or 250 gp for the slow advancement
track). If the PCs failed to earn any of the rewards listed for
an encounter, deduct the amount listed for the applicable
subtier from the value circled in area F. If the resulting value
is negative, use 0 instead. Place the result of this calculation
in the shaded GP Gained field and initial the adjacent box (Q).
Step 6: Allow any PC who qualifies to make a Day Job
check, and enter the result of this roll (determined by
Table 5–1 on page 22) in the Day Job field and initial the
adjacent box (R).
Step 7: Cross out any treasure items the party didn’t find
in the scenario and mark any special boons the players
did or did not earn (U); additionally, if you’re running the
lower subtier, always cross out all of the items listed for the
higher subtier. Return the Chronicle sheet to the player.