One of the players in our campaign plays a level 6 favored soul. They have selected Versatile Spellcaster as their next feat; it reads
You can use two spell slots of the same level to cast a spell you know that is one level higher. For example, a sorcerer with this feat can expend two 2nd-level spell slots to cast any 3rd-level spell [they know]. (Races of the Dragon 101)
Does this effect chain? In other words, could the Favored Soul expend…
((Lv0 + Lv0 -> Lv1) + Lv1 -> Lv2) + Lv2 -> Lv3
…to gain a 3rd-level spell? It would expend two 0-level, 1 1st-level, and one 2nd-level spell, but would be extremely powerful at higher levels.
How does this work, and is this an acceptable use of teh feat Versatile Spellcaster? If so, are there any balance concerns to be aware of?