I played a ladder years ago with 10-12 people (can't remember). The way it worked was you could only challenge up to 4 people ahead of you. So number 10 could not challenge number 1, he had to work his way up.
At the end of the season, the ladder was used to seed the top 8 guys for a quarterfinal type tournament. It worked out pretty well for 2 seasons until the guy running it skipped town.