A small taste of success....

After a few hours of tinkering with the leveling system I've arrived at a system that pleases me.  In the development picture below you can see the stag now orienting himself correctly to the terrain.  The orb in his face fires a raycast every .5 seconds and determines it's distance from the ground.  After moving outside the acceptable levels for a level creature, the state machine starts slowly rotating the animal back to level.  It works surprisingly well and is virtually undetectable by the player.