Hello Everyone,
If you think about college football (it's just an example so don't go off on a college football rant), they have Div 1A, Div II, etc... and all of their divisions have championships. There are plenty of details to work out so stay tuned.
edit: Sorry for the length....just kept going lol :)
In keeping with you CFB comparision, FBS vs football subdivision teams have nothing to do with size. Schools like Noter Dame (8300 undergards) or U of Miami (10 300) can compete at the FBS level if they choose to against the OSU's Alabama's or other 50K plus schools. The teams choose which division to compete in. It works specifically because the teams choose where to compete. Size has nothing to do with it.
Furthermore, big schools that compete in the Football Subdivision don't dominate - the top kids don't want to compete their so they will go to the lower level FBS schools and try to upset the big dogs before going to the subdivision. Basically the lower division are for teams that just are not there and know they are not going to be there and they are good with a lower level championship.
IMO the problem with limiting D1 based on gym sizes is that you will basically have athletes leaving small gyms for the chance to compete in D1 at worlds. This can only serve to hurt small programs who will have an even harder time trying to grow a high level program. This will just serve to feed the established teams and hurt the small up and coming gyms.
I am new to the cheer world, so I don't know how big GBE, PCM, Mac's etc are but from how they are talked about they would seem to be smaller programs than the big names but it would be wrong not to have them competing, they are great teams that could easily win and only seem to be getting better - that would stop pretty quickly if they were told they had to compete in D2 and half their athletes left for a D1 team. Can't blame the athletes, they are doing what the rules force them to do to compete at the highest level.
This will also not only effect level 5 teams, any parent who has a younger CP that shows the promise to reach L5 will go to a big name gym first because if they can make it to that level (even if they can't), because those are the only gyms that will compete in D1. There will be a ripple effect down to the lower levels as athletes are driven to the top gyms even more.
The big will get bigger and the small will struggle on more than they already do if you force small gyms into D2 based soley on arbitrary numbers. If you just want to status quo with the top 10-15 gyms remaining dominant this is a great idea, if you want to build the sport beyond those team I think you have to let the small gyms compete in D1 if they choose.
If teams are putting themselves in the wrong division the market will take care of it - no parent is going to want to put their kid on a team that gets destroyed at D1 worlds when they should be in D2 and conversely, I would hope that most athletes (and likely parents) would not be satisfied winning D2 when they know they should be in D1. Given the parents are still footing the bill this should be self correcting for gyms.