I don't think the spirit of fair competition ever enters consideration in USTA matches. Everything is just following and bending the rules even if it leads to unfair situations.
I wrote an email to the LC documenting this one player who entered 2 Open tournaments recently. He won one tournament without dropping a set and got to the finals of the other only losing to a current D1 player with respectable scores. His ESR for this fall was 4.0. The response I got was bascially well that is where the computer put him. He was playing mostly mixed the prior season with varied results. Open tourneys do not affect ratings.
He knows he is not a 4.0, the captain knows, the LC knows. Pretty much everybody knows, but rather than not allow him to play in the "spirit of fair competition " he is allowed to stay on the team. Unfortunately this team is well known for throwing sets/matches so they will know how to keep him around for playoffs.
So yeah I don't see many teams in your league moving up a whole level or 2 so they can compete fairly.