Well, first of all, I'm pretty sure that you can't just drop a AAA team down to AA just because they can't compete. The region is decided by school size not ability.
As a weaker school, I'd love to play in a region where I was more competitive, but where would that leave us. It sucks to be the pathetic team in the region who always finishes last. Lakewood was AAAA for the first four years and had to play teams like RNE, Spring Valley, and Ridge View. Then we were dropped to AAA with A.C. Flora which gave us better opportunities to play good soccer. Now we are with West Florence who thoroughly dominated our game.
My point is that in each region there will be a powerhouse, a few good teams and then the chaff. If we just put the good teams in one group and the poor teams in another, we would have two regions. The Good and the Bad (and where would the ugly fit in?). Separating the good from the bad is the reason we have playoffs. We don't just throw the weak teams in a corner because they suck.
Our teams need this strong competition. It gives us something to work towards. If we never see it, how will we ever achieve it?