Wow, great post on multiple levels!
Yes, there was the elephant in the room, all those years when 7 of the final 8 in 1A thru 4A were private/parochial...and the converse you mentioned has happened too...not just in football; basketball also...
Flip side though - I agree, Linton might well have been playing at LOS last year but for the success factor...and folks around Linton would have been proclaiming it as one of the greatest teams Linton has ever had...when we now know otherwise....I mean Southridge and Sullivan both outscored Linton by four touchdowns last year.
As far as the IHSAA taking away the opportunity away from those kids, well, Linton's roster was over 90% underclassmen last year. So those kids have a chance this year. In 2A.
It's a tough call. Some small schools are in fact penalized by the "success factor" for having a "good run." Others, who are perennially good programs probably would be OK playing in a higher class anyway.
But I do agree with you on the IHSAA's reluctance to "call a spade a spade" as you said.