I'm honestly ambivalent about the classing. I'm also not saying the win or be done is inherently "unfair", we're all playing by the same set of rules. If we simply said in IN we have one class and one champ and that's it then I think our system "makes sense". The podium @ state would have one spot on it #1. It could also be a one day event because no matter what round you lost in you'd just be done.
But we don't do that. My issue is with 'placement accuracy'. We supposedly place kids 1-8 @ the State Level. It would be like having heats in track and not keeping times. Instead you'd just take say the 2 fasted kids from each of 4 heats and then put them in the finals together and say that based on how they finished the last race that placed them 1-8. This would be absurd, unless the heats were so clearly seeded based on times that you never had the 3 fastest kids in one heat (that would be like the proverbial Friday Night Death Draw or @ SS the terrible "Ticket Round" draw that we discuss all the time in these posts).
In track the problem is easy, you can use the times. In wrestling, you have wrestlebacks to accomplish this task. Again, it's not a round robbin, so you can always argue about some match-up that did not happen. But wrestle-backs do a reasonable job of placing the kids accurately and they are the common system used in our sport.