Would you then recommend to anyone that wants to be a level higher than they are to play at that level the following year?
In general, yes, assuming you can get a reasonable number of matches at the higher level - obviously, chances of moving up are not good if you only get to play 1 or 2 matches.
But assuming a similar number of matches, it comes down to what DNTRP delta you can achieve/expect per match (the incremental dynamic rating increase/decrease you get following each match).
If you are a top 3.5 playing 3.5, you are *expected* to beat most other 3.5s. USTA says 6-1 or even 6-0 sets are to be expected when a person at top of level plays a person at bottom of level. So basically, as a top 3.5, you don't get much incremental rating increase by beating up on weaker 3.5s, or even convincingly beating mid-level 3.5s - because that's already expected of you. You can get some increases by beating other top level 3.5s, but who's to say how many of those you are going to face. That's why you sometimes see players with great records and convincing wins still not get bumped up - because the wins did not come against opponents with high-enough dynamic ratings.
On the other hand, when you play up, you are expected to get killed. So any scores that are better than a complete beat-down are going to increase your dynamic rating. So for example if you are a 3.5 playing average 4.0s, and you lose all your matches 3 & 3, that is likely to be enough to get you bumped up... because that would give you results similar to what would be expected of a low-level 4.0 vs mid-level 4.0s. And even against higher-level 4.0s, you can generally scrape together a few games (some stronger players will lose focus once it's clear they are going to win).
Purely anecdotal, but in my experience the majority of players who get bumped up played some at the higher-level already in the year prior (usually in addition to their rated level). It's harder (but obviously not impossible) to get bumped up playing only at your rated level.
BTW I am thinking mostly of singles. The same logic applies to dubs, but the waters are muddied because then your partner's rating also comes into play. In terms of bump-up odds, you're better off playing with a weaker partner (assuming you can carry him and still get results). Playing with a stronger partner increases the combined rating of your team which raises the bar of what results you are expected to get before you get any dynamic ratings increases.
