I'm not completely sure a one-tournament system is the solution either. If you look at the teams this year compared to last, it's about 50/50 in participation (half new, half returning). It's the same margin for NHL playoffs so I'd say the system works in that regard.
The issue comes with the teams that are returning being the same teams getting through every year (i.e. Breck, Hermantown, STA until next season). Ideally, if we could gauge where a team will be at the start of the season, you could move them according to make it competitive within the sections and the resulting state tournament. (Move up the strong A schools, move down the weak AA schools). Problem is, we can't do that...by enrollment and player ability. Now, if Roseau can play up I don't see why schools like Hermantown can't but I personally like there being a consistent small town being strong in the tourney. I think where the biggest issue arises is the obvious, the privates, but we're going to refrain from that...again...
If they seeded state 1-8 rather than 1-5 with a draw (as they say they do - up for debate of course

), the loss/shot margins would be greater.
Point being - There never will be an efficient way to gauge sections strength and as a result there will be blowouts and program monopolies.