In terms of stacking, there is nothing wrong with it if you have the talent pool to pull from. Coaches should try to make the most competitive teams possible.
Sandbagging is a completely different story (using the example of a senior 4 dropping to level 3 or 2). That is perpetuating the self entitlement idea of "I want that jacket now and I don't want to work for it". The spirit of youth sports is that our kids learn more than just a cartwheel. They learn teamwork, sportsmanship, conflict resolution...none of which they get if they are being taught that its okay to cheat. Sandbagging is the equivalent of Gabby Douglas showing up to AAU Nationals and sweeping everything.