I find it would be demoralizing to have to create weak characters to participate in something like the ranks, when others can use just about any character they want, just because one has a higher skill level. 

In essence, it kind of ruins the ranks, because then you're not really the best when you actively tell a skilled fighter he has to be weaker to participate, or risk not getting any fights and thus not a fair chance of actually gaining rank. 

that's what I wanted to try and avoid by having everyone fight everyone, instead of a cycle of fighting people you either know you can beat, or have a good chance of beating. 

it seems like its been as much implied that many won't fight anyone, at least for rank, if its a good chance they'll lose.

while Skally has some strong characters, who doesn't? many of his, from experience, tend to be totally scalable to the fight.