There are plenty of problems with USTA play, but not the least of which is the fact that despite the number of levels (1.0-7.0 in 0.5 increments - about 14), only 5 are really used (2.5-4.5).
What that means is that you've got a huge disparity in playing level at each of those 5 levels. Even worse, there's a structural flaw in that only a few teams even have a chance of getting to districts, then secitional, regional, etc.
The end result being you often see hard fought, competitive matches in the first few rounds of local playoffs, between teams that are pretty much at the right level - where all they're really playing for is the right to get stomped by the one or two teams loading up for nonlocal competition in the local semis or finals.
In fact, this is what happened to my team, this year. I had the privilege of practicing with a different team not one, but TWO levels higher, and I'm not sure they could have beaten the team that killed us in the local playoffs. And I'm pretty sure the team going to districts at the level below us would have made the playoffs at our level, too.
I think the big issue here is the ratings aren't fluid enough. Have a bad season (below .300)? Either as a team or as a player? You get moved down. Have a good one (above .700)? You get bumped up. You see it in soccer and Davis Cup, why not amateur tennis, too?
As it is right now, you've got people managing scores and competing against some mystery number, instead of the guy across the net. That's just not right.
Also, benchmark players should be at the LOCAL level, not playoff. For any given level, the players that make it to regional competitions are by definition the cream of the crop. Skim them off.