If you are going to do a 1-16 , or 1-8, you'll need to do a balanced schedule (between the teams ranked that way), which can never happen.
Sometimes it works out in your favour, sometimes it doesn't.
The odds in each round is likely not much better than 60/40 and most are closer to 50/50 anyway.
A team which is 10 points ahead of another during the season means they win about 1 more game for every 16 played. During a 7 game series, the difference becomes even more marginal.
There is a reason why the #1 ranked team during the season doesn't win all that often. They may have proven over an 82 game season to be better than the rest, but with parity and randomness, the odds are still heavily stacked against them, or any team.
Playing 1-16 would help the better teams for sure, but the odds would still remain slim for any particular team winning the Cup.
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