Aye, smaller allies have been tried, round 28 the max members was cut down to 15 for private allies, and whilst yeah there was more competition, and it was a fairly interesting and exciting round, it was strenuous having only 15 man allies, put alot of strain on contactability and even more so on activity, there were many times in YouSuck it was just me/Masa keeping watch, with another 5 members those situations disappear.
On the flipside it does make attacking allies theoretically easier if they have less potential defenders, which can lead to more successful resistances (if resistances ever get off the ground again), but could lead to a swing in balance between solo and allied play back towards solo which was seen during the end of the pure solo era.
It is a tricky situation, I'm personally in favour of 20 man allies, eliminates most strains on the few by having more members to keep watch/defend at all times.
As for the same people always winning, this is a lie, yes the same 40-50 players are consistently over a sample of 10+ rounds in the top 50 etc, but rarely do the same ones win consecutive rounds, let alone several on the trot, (admittedly Ryu got 3 on the trot in 36-38, but 36 was an odd case of Prest merging with half of the original History to retake R1 from the other half of History who'd stabbed them in the back). The same players do well, because they are the ones who put the time in, and have the knowhow to do well (again in most cases, there are some clueless noobs who get carried occasionally).
As for lack of recent competition, this round saw more jostling for rank 1 than last round did, (admittedly Omni last round imploded after 2 days of inc and RiF didn't want rank 1 so kamikazi'd to get out of range and let Klepto win) and the round before that wasn't settled for a good month atleast, with all 3 of Aphallatosis, Res and dRQ holding rank 1 at various times in the first month of the round.
Some basis in fact in your arguments would be good qaerwe5r4556, instead of just spouting random assumptions.