I see what the OP is getting at now. Remove the cap on LP, and have only the top 8 diamond-eligible guilds be placed into it. Everyone else is capped at platinum, until they surpass one of those top 8 guilds. On paper, this sounds like it would ensure that every guild in diamond is top-tier, compared to the current system where the relatively low cap is starting to lead to relatively weak guilds making it in since there's not very high a guild can go over a long period of time.
Of course, this wouldn't really fix any of the lower tiers, but it would at least ensure guilds are continuously motivated to do well in order to reach or remain in the top league.