Maybe you are right, although I have not seen any evidence of this in all my time playing TW. Total gp of participating members is clearly the main matchmaking factor. 99% of the time when insurmountable guild mismatches happen it is because the larger guild has low participation. And as I'm sure most would agree, the number 1 factor in determining guild TW strength is the average roster size of a guild.
The problem that needs solving is bad TW matchups, which is almost exclusively caused by participation. Maybe some bad matchups could still happen, I know that some guilds will force everyone to sign up for TW but not care about participation on offense, which generally leads to a free win for the opponent, but usually nobody has an issue with this. The issue is when guilds are trying their best to win and are being given no chance by the matchmaking system. Forcing guilds to only compete with others that have a similar amount of participating members seems like it would solve this issue immediately, no?