That approach basically assumes that you level your team to the lowest common denominator. So if you've got a level 3 team, don't even think about trying out unless you've mastered your robhs tuck and punch front - and even then, if you don't have other skills you might be out of luck. And that works great when you have 800 kids in your gym and you can basically pick and choose which kids to put on what teams and level them accordingly.
But what about the gym that doesn't have 800 kids? You know, the small gym that competes senior 5 even though they only have maybe 3-4 girls throwing fulls. Should that gym be competing senior 4? Perhaps. But they're likely competing senior 5 either because A.) they think they can do well in other parts of the scoresheet to make up for lack of tumbling or B.) they're worried about losing the kids they have to the big mega-gym if they don't have a higher level team.
And we are worried about the phenomenon of the star kids going from the small gym to the mega gym, because a lot of people have endorsed the World's transfer rule. So we know that there's a competitive balance issue that we're trying to address.
Look, in a perfect world I agree with you. You create the team that gives you the best chance to win. But it raises the age-old question:
A.) Do you want to stay with the gym that has a lower-level team and wins a lot, but can't field a team that meets your skill level?
B.) Do you want to go to the mega-gym where you have a chance to be on a World's team, but you're a smaller fish in a bigger pond?
I'd guess a lot of kids pick B, which is why any rules about sandbagging, crossover, athlete credentialing or competitive balance in general have to take that reality into account.