Well the problem is much more deeply rooted than just a simple "people don't want to play to lose tourney seeding" and you can honestly see the reason why by just looking at the league system.
https://www.rankedftw.com/stats/leagues/1v1/#v=2&r=-2&sx=a
Let's compare it to sc2 league distribution.
FAF has 2170 unique users playing ladder this month (first time we broke 2000 in all of FAF history)
Our 1800+ (.1% of monthly activity) is mid-tier grandmaster.
1300-1800 (.5% of monthly activity) is basically the rest of grandmaster and most of the master division.
800-1300 (13% of monthly activity) is mid tier diamond and better.
300-800 (25% of monthly activity) is below mid tier diamond to mid tier platinum.
<300 is everything else.
Now, with our Trueskill implementation, we would expect 1500 mu (or about 1200/1250) to be somewhere at uppercrust of Gold, instead it's like Diamond I.
I believe there's just a fundamental flaw with the rating distribution that revolves around the fact it was implemented in late 2012 when the dataset for ratings was essentially all the GPG vets that Zep knew and invited onto the client or cared about FA so much that they managed to find an alternative way to play once GPGNet closed. This initially biased sample has caused trueskill to have a skew towards what it expects the initial 1500 mu player to play as and so we have an absurdly large general deflation on FAF that makes the problem of finding players at the upper tier quite extreme. This is further accentuated by the fact that a lot of these older players are now also inactive and the system itself cannot do any sort of correction by redistributing rating from older players amongst newer players, or taking the rating from newer players and giving it to older players.
I'd rather just do a general rating reset frankly rather than a decay, I see the problem as a lot more deeply rooted into the structure of the rating system than what a decay is going to be able to solve.