The Elo system is a mathematical formula for estimating individual player's strength. It seems like iD developed their own to fit Quake Live and my opinion is that it's not nearly good enough.
None skill matched games can be avoided by publicly showing a correctly calculated rating for each and every player. Rating is a number in the 1000-3000 range not 0-100. Rating never change faster than regular 32 points over five games not 15 current rating points over one game.
Tier slumming can be combated by indicating the number of matches played by the new player. Rating is provisional until 20 games have been played. Rating is corrected if you play versus players with provisional rating once 20 games have been played. Provisional rating is flagged and displayed with a P, like ####P. So when you are about to face a tier slummer, there is a clear indication that the skill rating might be totally off. Rating take weeks to build, just like Quake Live skill.
I can't tell you exactly how to implement this correctly, but clearly you haven't because a lot of players are pretty upset. Players can help the system to work if they know how it is working. The current one is way too easy to exploit, you just create a new account to get easy matches.
Rating is accumulated more like experience points alongside frags and wins. Losing a match 30 to -1 doesn't make you a very bad player in comparison to your opponent. You should never lose more than 32 regular points of rating. In the current system that would be ~2 rating point.
With all this in mind, the skill rating system for team games and FFA must be corrected also, but that is even trickier because Elo rating can only be used for 1 vs 1 matches like Duels.
When you create an account you are supposed to play 100 games in your favorite gametypes not just one or two to check out Quake Live.
Few rules of thumb. When you join a game or a specific team, you should know what rating is required of you to perform a skill matched game. When an opponent joins, you should know what will be expected from you to maintain the balance. Rating must be displayed in web lobby and in-game scores for every player, not just an useless server average comparison of some sort.
Read further about the math behind Elo rating on Wikipedia.
How will the community repay you? Is the reward only in the deed? Making Quake Live as good as it possibly can be clearly must be worth something for a dedicated game developer. Players will notice if things work and use it more frequently.
Vote for new public rating.