I agree for the most part in the ultimate ranking, but believe they should automatically bump down the bottom players in the league to compensate for the people the playoff winners that are bumped up. This has clearly happened in the Bay Area. The highest playable division has lost between .5 and 1.0 on the USTA scale in the last 3 years.
I did get bumped out this fall with a rating of 8.0 and coming in second. I'm unhappy about not winning, but it was against a good player in 3. If I wasn't bumped I wouldn't have played anyway as no one got bumped down and they brought the next set of 2 weaker players in.
In terms of "playing down", I have recently done this due to improvement in my game. I do go out for every match with the crush the opponent mentality and have not had a single complaint. At first I was playing lightly to be nice, but I think people really prefer just getting beaten.