The main issue seems to be that we have birthyear major/minor and hybrid teams all playing each other. This is certainly a problem but not solved by flighting. It starts with the CAHA approach to AAA which is out of step with other places, and with what USA Hockey suggests. But at least in AAA you have birth year teams playing other birth year teams. A lot of the problem was created when SCAHA (and CAHA) started allowing entire teams of kids playing up a division in non-Tier and AA.
They have begun the process of stopping this, by stopping kids from playing up out of Mite.
It's a very draconian reversal that doesn't recognize the frustration that some parents who start their kids playing hockey at a young age have at the point that they have already watched 3-4 years of cross ice hockey.
I think the logical solution, without backsliding into allowing 100% mite teams to play up to squirt, is to add a new top tier for mite teams to play full ice games, once they have participated in a full season of Level1 cross ice, or whatever they call the top level.
I agree that if these "play up" teams were removed, we would have far less of an issue, as at the squirt and peewee level, they have driven the 2-3 teams at a club phenomenon.
What you see at Bantam is what a lot of people who are familiar with the way different kids mature and develop predicted for years: that the differences in physical maturation become more important once checking is introduced. It's much harder, even for the top 5% underage kids to compete with teams that are physically more mature, and at the same time, some of the things that made those kids better aren't that special anymore. They tend to return to the pack with 1 or 2 exceptions. Even at Peewee AA this looks to be the case. CAHA chose to place an '07 team into the top Flight this season, with very little competitive information to back that decision up. We will see how things go, but the other '07 teams are in the lower flight and we will also see how they fare. I think there will be some issues for both set of teams.