Following links I found on Petopias website, when tested, it was found that a pet will increase 1 level of loyalty for each 5% of the experience YOU would need to earn to level. Even once you hit 70, the pet still needs the theoretical experience earned in order to lvl. Which means you must be killing mobs that would give you experience.
In my own personal tests in the past, I found that my pet would gain a lvl of loyalty for each 1/2 level of experience that MY PET earned.
Even to level low level pets, you must still kill mobs that would give YOU experience. I recently grinded a boar from 10 to 70. (Really wanted a black one.) I was able to get from 10-50 in a few hours of playing. Once he hit about 60 the leveling became quite slow. However, I would strongly advise against trying to solo or specing BM while bringing up a low level pet. My tactic was to spec SV for a while and drag my boar through several heroic instances. Not one person ever griped about my low level boar. Even the first run through heroic ramps with him at lvl 10. Was pretty funny to watch him gain a lvl almost every kill. And if someone had tried to argue against my low level pet, I'd simply report the damage meters where I was always #1 and shut them up quick.