I don't know. I think that if the "gotta win" crowd isn't in your bracket, more people might go to tournaments.
Going back to my baseball analogy, how many local softball leagues would there be if there was a law that required you to allow professional baseball teams to compete against you?
How is wanting to compete against people of similar level proving that I want a participation trophy? I just want an even match. Or a match where I don't spend 90% of it wondering why I even bothered when there's no chance.
There's a big difference between a 34 year old who is training for the Olympics, and an adult who is using martial arts to get back into shape after living a sedentary lifestyle for the last several years.
This is kind of the point that I'm making. The purpose is to demonstrate the principles you're learning. So you demonstrate them and lose...what does that prove about the principles? If you think about it, nothing. But the initial feeling is that you followed your training and lost.
Yes, there is beginner vs. beginner. But as you get to the more advanced, you have students with different amounts of hours in sparring training. Take a traditional school with 20% of the class going to WT sparring, and a sport focused school with 80% of the class going to WT sparring. In the red belt division (let's assume 2 years), you might have a traditional student with 50 hours of sparring training going up against a sport student with 200 hours of sparring training in class.
Is that a fair bracket? They're both red belts. But one has a clear training advantage over the other in this case.
And what skills are you trying to advance? Because you're not advancing your traditional Taekwondo skills. You're advancing your WT sparring skills. Which is only a small focus of your class, and you're not likely to go again for quite some time. By the time you go again, you'll be in a different bracket, and you'll probably have forgotten or not be able to apply the lessons you learned, because of the time and the change of division.