Why is it crazy? Other games tournaments (even official) are done that way. It isn't some "random crazy" idea I came up with.
Honestly, I think it doesn't kill the fun. It gives more focus and importance to your team and idk, we could have something like a "hall of fame" for every tournament showcasing the winner team.
But hey, that's just my opinion.
And yeah, maybe you're right, it isn't necessary if shuffling is implemented.
Still, in the latest stages of the tournament, it will still be effective to scout. That's why I'm suggesting only one team, so scouting becomes pretty much useless outside of movesets.