Under the system I proposed, the higher tiers would get more quotas, so Europe would be fine. We might actually have more competitive fields that way, and it would be easier to give quotas to nations that deserve them.
Personally, I’ve always thought Europe has too many quotas, and it discourages the growth of many sports (canoe, handball, modern pentathlon, etc.). The Olympics are for the best in the world, emphasis on the “the world”. I agree that competitions should be of the highest quality, but we should also get to see the Pita’s, Shiva’s, and Eddy’s of the world.
I actually think that the IOC is moving in the right direction in a lot of places with this.