Based on the OP the system should search for players in broader grade range if there aren't enough of them, so the Q times should not increase that much in my opinion, especially not for the mid-range players.
This could work, but not based on player per player basis. If you could setup your own DF requirements - match me up with players who do above 1000 DPS etc. that would be much better and every single player would have certain level of control over it. Of course the servers would need to record your performance.