The reason why for a T1 - 2 player the MM looks good is because it is the most populated area of the game, along T3 which is slightly lower. And there are factors deciding that. Some would be: newbies trying the game (the biggest pool), newbies who didn’t quit yet (the second biggest pool), vets chillaxing (holy crap there’s lots of them doing this!) and vets synergising new ship trees and maybe a few more. T3 has vets gathered from T4 and 5 as well. T4 and 5 are nearly abandoned.
So in T1 and 2 it’s fairly easy and fast to get a somewhat balanced game purely because of sheer amounts of people. I’ve recently been there and checked it (sometime post 0.9.9). You can easily see this in the queue chart given by the chat command as well. Even for squads it is sligthly better in those tiers because the chances for the enemy team to have a squad of it’s own is higher. With T3+ everything changes in the opposite way.
The fixed tiers skill-differentiated queuing is the only true way out, like it or not, period. Done some extensive thinking and in conclusion i can only see all tiers split in 3 sections: casual players vs casual players, average vs average, elite vs elite. Squadding will influence as well where you would be put (+ pilots’ skill ofc and ALSO influenced by playing time - see below). The game approaching release must make devs stop taking in account the current playerbase and think ahead. It’s a beta that’s almost over.
Now let’s step to a really big problem among ALL of MM’s deciding factors: playing time. A guy (especially a newbie) who plays, say 3-5 battles a day will ofc be below the level of one playing 20+ battles a day, even if they fall under the same category as casual, average or elite. That has to have a deciding factor in MM as well.
Personally i didn’t properly get to see the pre-0.8 fixed tier match making system, i joined directly in 0.8. Being a beta i thought i might as well join into the forums to see what’s gonna go on with every update and probably help with suggestions and tweaking problems together with other people. However i felt the reverb of fixed tiers in 0.8. Matches were at THE WORST CASE having a +1 rank ship out of their tier. So if it was a T3 game, you ~might~ have encountered a R10 ship every now and then. R11 was so rare that it was worth noting in the calendar. However with every patch drawing closer to 0.9 it was getting more and more screwed up, till today when we get +8 ranks above ships in matches… like wtf?
So yea, in my very honest opinion: early 0.8 had a freaking amazing matchmaking (since i started playing, i’ll let the others compare to pre-0.8).
Here are some graphics i made to illustrate stuff:
1.

Current MM:

2.

3.

My suggestion is shown in the first graph. As you can see, all 3 are nice and linear and they fully range from T1 to T5, barred between each tier. Skill levels and squads are allowed to overlap by only 1 unit up or down vertically, given the situations i described before the spoiler paragraph.
Current MM compared to that barely has a clear explanation anywhere in a dev blog or forum post or anywhere else and is just a complete mindf*ck. And i am being serious about this description.
The normal progression rate in time (at 2.) should look like that, from day 1 in SCon to day whatever, with in-betweens, those being the upper and lower limits, with average in-between. But right now it looks like at 3. Since the squad-bumb-f*ck-up, casuals are pretty much put on stop, average will split into people who can cope with it and people who can’t, while elites will spring in full power getting new tactics and concepts about how the game works, and creating an incredible gap between them and the rest at a fast pace. As a matter of fact i started playing emp LRF ~hardcore~ (basically grinding for Styx) 3 days ago. The difference gap was never this high between me and any other average or lower player as i constantly know i’m safe, i can defend myself against all high-average attacks and can safely treat my ship as a complete gunship in the heat of the front line instead of chillaxing at the back all the time. It has to take another elite player i already know to take me down (or even 2 given my progression with it) while it takes me a lazy push of 1-2 buttons to wipe the space dust with a high-average placed player.
Want another skill progression tree image with current MM + squad mechanics? Look here (just add ‘SCon squads’ next to Eve Online):

TL;DR - Fixed tiers with self-differentiated skill levels is the only good solution imo for a fun and fair game. They both lack now 95% (5% is just the late matches where i did all possible bullsh*t instead of objectivesm, except one-shot sniping an ECM captain yesterday as ‘First Blood’ in a few seconds after start).