This system was even more terrible. Your rating did only reflect your play rate, not your skills.
This is an issue, but i dont know if just limit the Elo range within a team is THE solution. There are also option in which you use some weight average for teams in some way, where the highest player will get much more weight then lower rated players. I think i much more prefer such option.
There are alraedy more threads in which this issue is discussed in more detail. I would suggest you to look at Analyses of the ratings - Spotting the issues as example of such thread.