The rating/class system is an interesting idea.
Chess has a similar system although there are a greater number of classes GM, NM, M, A-F. Each player is given a numerical rating and they earn points based on wins losses and draws against other rated players. Your rated number determines what class you are in. There are tournaments for only certain classes.
Self rating would not work, IMO. There would have to be some sort of calculation of a team's overall rating. (An average of the parts or sum of the parts). This team number could determine the class. Without a system in place, people will be butt hurt over getting told they are a C when in their minds they are a B or A.
I find the rating/class system to be both good and bad. Bad because it would take active participation in more tournaments to adjust a rating based on player development. (This was my biggest complaint with the chess rating system).
Districts will naturally be stronger than others, because when you play with the best players constantly, you raise the skill level of everyone. So to give the weaker districts the equal number of spots as a stronger ones, could be considered unfair.
Maybe it some sort of hybrid of both. I dont know.
Well, Cohaagen, I have to hand it to you. It's the best mindfuck yet.