There is nothing wrong when elite and good underclassmen are in the line-up. We have a unique sport where size doesn't always make you better, but its technique, conditioning, heart, etc.
The problem I see is that it doesn't take a good wrestler to make varsity at the lower weights. Many times it just takes being the right size and showing up to the practice room. If coaches have to lower themselves to getting kids out because of a varsity letter, then we aren't doing the sport any good. My recruiting pitch to a 105lbs freshman shouldn't be, "you'll get a varsity letter," it should be, "you get to kick some butt, be a part of a great team, have a cool coach:), and have fun with some great teammates."
The stats are good to show trends and mark red flags. There were 65 freshmen in the state last year that qualified for semi-state. That equals out to about 7%, which I could honestly say 7% of the freshmen in the state are good to elite wrestlers. The problem lies in that 29 of those 65 state qualifiers were at 103lbs. I really can't fathom that almost half of the best wrestlers in the state in the class of 2012 are at the same weight class. That does not make sense to me.
Your next question would be about the elite Olympic level wrestlers at lighter weights. Well, where do we get those types of wrestlers at the higher weights? They start out at middle and upper weights and take some lumps when they start out because the older and wiser upperclassmen are a little better. That has not killed the sport at the upper weights because the freshmen have to wrestle juniors and seniors and take some losses from them.
Raising the lowest weight to 106 or 107lbs will only help the sport by making more kid eligible for the weight class. More kids means more competition and will also mean more older kids will be able to wrestle that weight. Wrestling has endured two other weight changes of the lowest weights and survived. The sport didn't die back in 1969 when they raised 95lbs to 98lbs. Nothing drastic happened either in 1988 when they eliminated 98lbs for 103lbs either.