There is no combination of transfer rules or competitive balance formula that will not negatively impact someone. Push D4 to D3, push D3 to D2, push D2 to D1. The result is someone will get beat by a team that they would not have otherwise played.
Some moves are for legit reasons others are for athletics - who is to judge what is legit and what is not? Do you push the review of every last change of address to OHSAA and away from the schools? Better increase those dues to cover increased staff, enforcement and lie detector tests.
Don't like the OHSAA format - schools could create their own invite only State Championship tourney. Invite whatever 16 teams you want, based on whatever criteria you want and award a medal. Just replace 4 games at the end of your regular season schedule. Call it "The Sterile - I Live in a Bubble State Championship".
Much of this is tongue and cheek, but I think this is all overblow. A state championship is very cool, but all the people I know who won a state championship don't seem to be living any different than those who did not win.
And what is cooler than a win like Marion Local had over Cornerstone. Means a lot more than beating a lesser team.