I think you argument ignores one very major element - player interest. Whilst the Arena combined with Reach's use of Trueskill and player progression system are indeed elegant and finely tuned and have deftly killed off the "black market" in the shady modding scene, it's been a complete failure for one simple reason. No one cares.
The Arena is but a shadow of the ranked playlists of previous Halo games. It is consistently under populated and nobody uses the Arena placement as a measurement of skill, despite how accurately it can judge you.
With the previous systems in Halo 2 and 3 it took week and months for player to find their ideal rank in a particular playlist. Afterwards they were pretty much locked in. Whilst this was a the cause of frustration for many players to be stuck at a certain rank, and contributed heavily to the demand of the back market, it was also a very fulfilling system in terms of making the player work hard and having something to show for it. A person's rank in a particular playlist was a badge of honour or shame.
The Arena's system of resetting rankings every month (or every three months in future) just annoyed players. Work your way to a Gold or Onyx rank, then it gets wiped, then work your way back again next month. Then next month again. And again. And again and so on. Most people simply said stuff it and didn't bother. Additionally, with previous Halo games you could chip away and work your rank with each game, whether it be days apart or months apart. In the Arena you have to play so many games per day, play for so many days per month and then you get get rated and ranked. The requirements are far too strict and the average player simply cannot be dictated to about he or she can play. If a person comes home from work and spends some free time player Reach, jumps into the Arena, they'll see a list of playing times and requirements and say stuff it and jump into BTB, MLG or any other playlist.
With the 1-50 system, it was easy to compare yourself to other players. I'm a 38, he is a 45, so he'll probably beat me. We have a team of Lieutenants against a team of Generals - they are probably going to win. With the Arena you are placed into, what, for our five categories and then told about a certain upper or lower percentile compared with the total amount of players that got ranked within that specific timeframe or something, I think. It's a confusing mess for the average player to work out and it's hard to measure and to compare players at a glance.
We should go back to the 1-50 system. Not completely mind you, but there so much functionality lost that I think it's needed (we have only a single "ranked" playlist and we cannot have ranked objectives? Feck that!) but we need a 1-50 system that also embraces long term investment so that it doesn't fall foul to the Halo 3 era black market. Halo 3 system was good for it's time and we had to move on but I think Reach's approach, like many of Reach's mechanics, simply didn't work. Players vote with their time and investment and it's obvious with the Arena that the players abandoned it quickly. The Arena is not the way forward but there are valuable lessons to be learned and I think maybe a hybrid of the two systems would be ideal but that kind of discussion is out of the remit of this reply.
TDLR
Arena has failed, we need the 1-50 system back without the black market elements and with the player investment from Reach.
