I think we should broaden the discussion beyond the whole "level 5 team disbands" premise to something more general - whether it's ok for an athlete to leave mid-season for another gym, and if that athlete should be allowed to compete at Worlds for that new gym.
That's really what we're talking about here. And I think once you start getting into "valid reasons for denying a transfer request" or "valid reasons for leaving a gym", you get into all sorts of grey areas. The reason I might think is valid to deny someone a transfer might be completely outrageous to someone else.
So for me, it really comes back to the question of whether the gym should have the ability to deny someone the ability to compete for another Worlds team or not. I can see the argument from the gym owner's perspective - that the current rule prevents kids from gym hopping and unscrupulous gym owners from recruiting kids to their program. But if I'm paying thousands of dollars for my child to cheer (keep in mind we're not talking about scholarship athletes here) I'd want at least some ability to leave a program if I felt it was warranted, yet still give her the option to participate on a Worlds team.
So I come back to my premise - which isn't all that far from what some of you are saying. I'm saying if you transfer you have to sit out from competition for at least 90 days, which effectively is the end of January. (although in practice it's actually more like December if you want to actually compete with that team and be on the floor when they get a world's bid). Some people are saying that you can't leave after November 1. Let's split the difference then and say mid-December, or even January 1, and have it be a situation where the release is automatic (provided you are up to date financially) before that date. After that date, then the gym has the right of refusal. That gives the athlete more time to determine whether they're in the right program or not, while giving the gym a decent amount of time to find a replacement if someone should leave.