Yeah - carrying a squad of over 15/16 is near impossible to operate fairly without rolling subs.
Teams should have the right to refuse promotion if they did not finish first in the grade they were playing in.
Argument could be said it is unfair to push relegated teams back up to the grade they just fell from however. Purely comms imo.
Stuff like this does happen at the intersections of the game, like amateur to semi-pro and semi-pro to professional, all the time around the world though. Sometimes it's clubs/teams that want to go up not meeting the criteria of the league above because their stadium is too small or whatever, sometimes it's that the club/team isn't interested in making a fundamental change like having to figure out going fully professional. You have to have these thresholds though, because it would be worse to let some teams have rolling subs but not others.
I think that once it's below Cap 4 they could perhaps create an entirely separate structure for "social" teams. If a new "serious" club or team wants to join they could potentially just do it at Cap 4, even if it means Cap 4 changes in size from year-to-year.