I mean, if there are actual rewards and incentives to participate in ranked, and the developer actually takes an active hand against cheating... it should be fine. We've seen countless times that mounts, cosmetic gear, etc are all things the playerbase values and so they make obvious examples of the kinds of rewards you could tie to Team Ranked to incentivize participation.
People argue against FOMO, but they need to understand that you probably cannot have a meaningful ladder in a game like this without it. "The game is fun" is not by itself enough in MMOs like this, players typically need a carrot to chase. That doesn't mean you never hand out that mount or armor set in the future, but it does mean that the rank reward is an exclusive version of it - compare the default gray Construct VII mount versus the red painted version from Unreal, for example. Same mount, but you could assign an exclusive paint job to it for people who finished top 100 or top 10 or something in Team Ranked for a season.
But I don't think Square-Enix ever intended to devote the amount of effort and active participation necessary to really keep a competitive circuit alive. Maybe they shouldn't have bothered with ranked mode at all - just do solo and play with friends queues from the start. Instead of assigning the adventurer plate rewards to top 1 or whatever, instead make them X wins during the season. If you won 1,000 games during a single season, you were probably going to be near the top of players anyway, right?
Yes, Riot and the others all use Elo-derived or TrueSkill-derived systems. That's what the whole "gains and losses are scaled according to rating" thing is.
And there's a *reason* it hasn't been done before. Have you considered what that reason, or reasons, might be? These companies with enormous playerbases (many magnitudes larger than the "dedicated PvPer" playerbase in XIV) to test things with, with several tens of millions of dollars in budget allowances for staffing and design, and a vested interest in running an effective and addictive laddering system haven't figured out how to define a meaningful and fair "personal performance" automated system.
And you think Square-Enix, with a shoestring budget for things like PvP and a tiny "dedicated" PvP playerbase and no real interest in a competitive and addictive laddering system will, or can? Come on, dude. Let's be reasonable here.