I think beating good players and doing well in tournaments is a better skill gauge as many people can get to the top spamming games when there are many players that can beat them lower in the ranks. It rewards activity and staying active (Due to decay) and that isn't skill it's activity.
While it is a good gauge of skill if you do well in tournaments, a good ladder is just as good to determine skill(if not better). Tournaments test BMT(big match temperament) and skill while under pressure. A good ladder tests true skill over time provided that enough players are competing.
You are saying players can "spam games" to climb
to the top of the ladder. This is true only for lower level play and you will never be able to climb indefinitely this way unless you are also a very good player (and then you deserve it). You will climb a fair amount until you reach a plateau at a higher skill level where you should not be matched against noob players anymore(assuming enough players are online). A good elo system will result in your win/loss ratio converging to ~50% over a long period(provided that you don't get better). If you keep getting better, your win/loss will be more than 50% over a long time. Now there might be times of day when players online is not quite ideal, but the system shouldn't be changed just to accommodate this.
Why decay/seasonal-ladder-resets is neccesary(and why I hope they are implemented soon): Lets say an average player starts playing. He struggles for his first 50 games but constantly improves. After 100 games he is way better than at the start but he has to win a LOT of games to make up for the losses he took initially in the learning process(if he wants to get a good w/l ratio and ladder position). If the ladder resets, he can start with a clean sheet.
So in the end decay/ladder-reset will give players who improved a lot over the last few months a chance to actually be ranked where they belong, while also weeding out players who are inactive. This may "reward" activity, but not in an unfair way. Remember climbing the ladder while being active also requires you to win games, otherwise you will drop down in rank (so it punishes and/or rewards "activity" depending on whether you win or lose).
Just look at the sc2 league/season organization. Im not saying sc2 is the be-all and end-all, but one can't deny that they have developed a great ladder system over the last 15 years(if you include sc1), and one should learn from them.
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