If you do the math, you will likely find that the Kings rise in the rankings was a function of their past results, and not the results from Buffalo. For the moment, at least, those are a slight drag on their rating. Haven’t done the math for the Dogs, but I suspect the same is likely true for them as well.
The ratings may have some hypothetical flaws, but it’s not a system that is easy to game. From what I have seen this year, most of the teams pass the eye test of their ratings, and the ratings generally correlate. It’s not too much of a surprise that a great AA team is likely to lose and perhaps even badly to a great AAA team; I would put more stock in the fact that the Kings played a competitive game against a top 20 AAA team than the apparently non competitive game against a similar team.