While I believe you are correct that Fargo can be a lagging indicator (and it most often shows up in rapidly-developing players, like top juniors), I think it has to be formulated to be the most accurate across the population. Pool as an element of luck in it, and so a player, playing at the same sill level, can go on both hot and cold runs that last longer than most might believe. A roll here or there can turn a 10-9 win into a 10-9 defeat or vice-versa, which might be the difference of winning a tournament vs placing a forgettable 3/4th.
All that is to say that Yapp is clearly one of the top players in the world, and capable of winning any event he enters. But is he the best just because he's had a string of tournament successes? FSR had his hot string a few years ago, and is also one of the top players in the world. How much has he won since then? Shaw can run 800+ balls in straight pool. Should he rank higher? For that matter, how about Schmidt?
If the rating adapts too slowly, it can underrate players, sure, but if it adapts too quickly then it will overrate players and will be nothing more than a "hot indicator" of sorts--letting us know who has the most recent success. To be most valuable, it needs to take as much information into account as possible and weight each of those pieces of information as best as possible to be as accurate as possible. Overreacting to a few tournament wins that span a few hundred racks would, I believe, run counter to that goal.
Which of the players rated higher than Yapp would you take Yapp in a long race? Let's exclude Ameer Ali and his 650-odd robustness, who keeps dropping every few months when another couple dozen games get added in. I would absolutely still take Filler and Gorst and either Ko and SVB. Probably FSR. I'd also take any of those guys to win the next tournament over Yapp, although, of course, it's close. So to me, he seems correctly rated.
If you want a more dynamic ranking system look at money won. That will tell you who's been hottest at the right time in recent tournaments. Fargo, and/or any broader rating system, should specifically not be blinded by short-term success and look beyond it in order to correctly provide the deeper insights that recent tournament successes can obfuscate.
(None of this is to say that I believe Fargo is 100% perfect in how it's formulated, just that I believe its current form is better than trying to initiate a more reactionary and short-sighted system.)