This system seems to be working reasonably well. However, because so many current players are old pros from the tangleword days, there are players that should have 3000+ ratings (according to their scores), but are still stuck down in the 1600s. In my opinion, the ratings system is about accurately measuring the abilities of a person relative to the other players in the room. And it could be doing a better job.
The alternative rating system I'm thinking about is (I believe) based on the tangleword approach. Add each score in a room, then add each rating in the room, then divide the sum of the scores by the sum of the ratings. Then to get each person's "expected" score, multiply that quotient by each person's rating. If a person's score is higher than this expected score, it goes up, and it goes down if it is lower. Indeed, this seems like a good plan and ratings are directly tied to relative scores, which is a good thing. I'm still mulling over whether I want to make the change, but it could happen. If it does, then ratings will become MUCH more volatile than they currently are. Some people will go way up and some will go way down. But it will be fair.