If the coaches are honest with the parents/players regarding their level of talent, I'm generally fine with players playing on whatever team they choose. With MHR now, it's pretty clear to everyone what level a team is at, it really doesn't matter whether they have 3 A's or 2. If you are ranked at the bottom of the AAA teams and lower than a bunch of AA teams, it doesn't matter the label, everyone knows you are AA at best.
It does bug me when these teams then schedule predominantly above their talent level, thinking they are going to magically compete. It's a waste of time and money for teams traveling distances to have to play some of these dreamers. I won't throw specific teams under the bus, but there were some examples in the THF tourney here this weekend.