In the wavelength-division-multiplexed optical access network, the system architecture based on remodulating the downstream (DS) signal for upstream transmission resolves the issues of wavelength management and hardware cost . However, this amplitude remodulation scheme introduces intensity noise in the uplink and leads to a system performance penalty. Therefore, the DS extinction ratio (${\mathrm{ER}}_d$) has to be optimized in order to balance the performance of up- and down- links. In this Letter, a novel technique is presented to overcome the restrictions on ${\mathrm{ER}}_d$ by introducing correlations into the levels of the DS signal to alter its spectrum. 4 dB improved tolerance to ${\mathrm{ER}}_d$ is achieved in the proposed system. The level-correlation coding technique is also able to mitigate the in-band crosstalk induced by Rayleigh backscattering. It is demonstrated that the system reach is extended by 40 km with the proposed approach.