Yes, I agree with you that a system like that can be abused to produce ugly results.
But, a way of distinguishing ranks is already present in the current system. Members with more xp's are listed higher up the list than those with fewer xp's. It's a bit like arranging people who otherwise look the same according to their heights, and the heights tell something about their experience or involvement or knowledge or a combination of these.
Has it been abused? I suspect the answer is Yes but only occasionally.
The suggestion of using colours to distinguish the levels was made to increase fun and motivation, much like the revamped levels.