To be clear, I'm not saying that the rating is 100% reflective of skill. Just that it's formula driven and thus an absolute result. Which of course is only as good as the formula and the data fed into it.
So yeah some people might end up with a rating higher than their actual skill, and some with lower. Such is life. I still think auto appeals do much more harm than good.
Whether appeals are good or not is a tough subject.
There may be legitimate situations where appealing down is a good thing, particularly if a player is unable to play at the higher level due to no teams at that level or a actual "mistake" spit out by the algorithm where someone can't really compete at the higher level but one of the strange situations that can occur does. If being bumped up and not having an avenue to appeal down causes someone to quit playing, that isn't a good thing.
On the other hand, it is certainly something that can be abused if every bumped up player is hitting the appeal button and some that genuinely can compete at the higher level are having it granted. Just like an algorithm "mistake" could bump someone up inappropriately, an algorithm "mistake" could end up having someone close enough to the threshold to appeal down when it shouldn't have, and now this mistake is compounded by the player being able to appeal down.
On the whole, I think there is probably less good about appeals than bad and I'd vote for doing away with them, or at least doing away with auto-appeals and making players file manual appeals, but there are issues with that too as how do you ensure appeal review is done fairly and equitably, and where does a committee draw the line.