I'm still in and through to qtr's with my Level 3 team, been up against level 5s in every round so far, but being a minor token buyer I've managed to get a winning side together.
I still think that the early rounds of the cup should be against 'same level teams' to give more of the lower level teams an opportunity to progress a bit further (maintain interest in T11) and then introduce the higher level teams further in after first couple of rounds.
I've been lucky, but I'd soon lose interest if I kept getting knocked out in the first/early rounds.