"Compete" is relative. If by compete you mean "within nw range to potentially get in conflict with a top tier kd from yr0-yr3" then I'll buy that. All "compete" means in that sense is they can get stomped in war 1 and be out of it the rest of the age regardless. By not allowing KDs with superior strategy, time, networking, to grow a single province with a kingdom pool, it simply creates more need for them to beat on tier 2 and 3 kingdoms, since now they literally have to beat down these bad kingdoms to ensure their place on the leaderboard. This directly shifts conflict to kingdoms that can't handle it, and they spend the whole age getting farmed/random by top kds as a result, to what is known as the "whore cap" - or, as high as you can grow making random attacks into bad or tier 2 kingdoms, which is ~125-135% the networth/land of the biggest provinces in these bad kingdoms (by bad, we mean 95% of the server).
Where you are misguided is that you think these kingdoms can compete, regardless.
They can't.
Now they're just forced to go into the ring and get beat up instead of staying small and irrelevant in their own utopia bubble with the rest of the bad kingdoms. There's a reason the #1 strategy for all top tier kingdoms is "look weak and find a war vs a **** kingdom to start the age off", because the war win bonuses are stupid. You literally can't compete at the top without them, because of how individual pools are skewed and setup necessitating war wins. It's. a. fundamentally. flawed. system. and it's the mid tier and ghetto kingdoms that pay the price.
TL:DR remove the war bonuses, there is no incentive to farm these bad kingdoms or "fake war," because it hampers potential growth.