The problem with this is that there are a lot more schools getting lumped into a theoretical private school division than the dozen or so schools located in and around the bigger cities that people take issue with. This doesn't actually fix the problem, it just puts the weight of the problem entirely on the shoulders of the other privates that aren't recruiting 4-5 counties or that have legitimate smaller enrollments from fairly well-defined areas.
If this was the OHSAA's real solution to this problem, if I was a small D4 school like Springfield Catholic Central that has a ton of basketball tradition I would start openly recruiting my county and multiple neighboring counties for the 2-3 best basketball players I can get in every class because the state association has decided to punish me solely for being private because their incompetence has gotten in the way of them solving a problem that revolves around maybe a dozen schools. There's no reason to accept getting boat raced by all of the stacked teams if you're wrongly slammed into competing against them. In that scenario, you may as well embrace trying to become one of them, which only exacerbates the problem of recruiting and effortful attraction of high-end talent.