Just a quick thought - not sure if there is a fundamental flaw in the overall logic - but could we have 2 Ratings for a Player?
A Modern Rankings, as well as, a League Ranking.
A Player would then could choose to be Modern Only or Modern/League.
A Modern Only player gets matched to an equivilent Modern Rated Opponent.
Whereas, A League Ranking Player gets Matched with a League Opponent.
If both the Modern/League Ranking Ratings are Similar then Opponents would be Available in Both.
For Example..
FatJimmy is Modern Rating 3000 (based on wins etc) but he has chosen Bronze League.
A Bronze Modern Player Rating of 1400 who does not want to play League, will not meet FatJimmy (Modern rated as 3000) as an opponent in Bronze and may move into Silver League and avoid being bashed by competitive League Players.
Then we would have a Competitive League Players fighting it out.
As they keep winning their "Modern Rating" would keep going up.
Would that fix the bottle necking of Leagues where Bronze became impossible to leave?