To the original post - I think the idea that's presented is a good start.
Where I disagree with Justin Carrier's response is his implication that preventing sandbagging over a full season is impossible. It isn't. As I've laid out numerous time before, a combination of athlete credentialing and a "majority rule" would take care of this issue.
Basically, my proposal is that all athletes need to be credentialed at a particular level at the start of the season - and that any team that competes at a USASF-sanctioned event must have a majority of their athletes credentialed at the level they wish to compete at. Athletes can change their credentialed level one time per year, and can only move up/down one level.
This would give small gyms flexibility to allow athletes to cross down to lower level teams without allowing them to stock teams unfairly. (it would be very difficult, if not impossible, to have a senior 5 team compete in senior 3 team in this model)