This is much like some online gaming challenge ladders that I use to participate in 15-20 years ago. I like the idea.
I would want to see a few changes to the system though.
1.) Allow you to formally challenge anyone on the ladder above you (excluding top 5, see #4), not just the person right above you. This gives players more opportunity to play more matches, win more money and the players will naturally fall into a good pecking order much quicker.
2.) Eliminate the “committee” and all players come in “ranked” as the next slot open. So if I am the 101 person to sign up, then I come in at 101. Good players will advance quickly and lower skill players will fall quickly, provided #1 and #3 are done.
3.) Open match entry. If I go somewhere and run into someone (or some people) and we agree to play we should be able to play and submit the results manually and immediately. With the loser submitting and the winner confirming the results. You can have a spot for players to enter a witness/submit video to settle any disputes about the match. This will allow you to play as many ladder matches against as many people as you want a night, provided that the previous one was entered and confirmed before you go onto the next. Again this gives players more opportunity to play more matches and win more money.
4.) Restrict who can formally challenge the top 5 players to only the person below them to prevent the top players from constantly being unavailable to challenges of other top players. These guys would still be able to play and accept matches in the open match entry method mentioned in #3 and rankings will be affected just as any other challenge if they lose to someone below them.
5.) Inactivity of players causes them to lose a rank after X days/weeks or whatever.
6.) Players may not play each other nor submit results of playing each other more than once within 24 hours. This applies to both official challenges and open match entries.
7.) If you get enough players break it out between 8, 9 and 10 ball. You can do this for any and all formats as long as you get enough players to play in them.