Allowing others to play isn't compelling to me at all. That never results in an appropriate league size, just an ever-growing one. There will always be people on the outside looking in. We should focus on finding the right size for our league. And there's nothing stopping a group of interested potential owners from starting a new league with the same rules.
I think there's no question that a deeper league further favors the knowledgeable. The more thinly talent is spread, the more you need to know in order to compliment the few starts on your roster. I'm not talking about prospect mining, just about the depth of knowledge of MLB rosters in general, and the ability to do research on what you don't already know. I think the fact that you think there are already dynasties goes a long way toward demonstrating this. In an 8 or 10 team league, it would be far easier to put together a solid roster and give yourself a shot at the playoffs (even assuming the number of spots was adjusted downward proportionally). General fantasy wisdom is that while you can lose a league at the top of the draft, you can't win it, because everyone knows enough to pick good players in the early rounds. We don't have a draft, but the lesson is that the shallower the league, the more evenly distributed talent will tend to be.
I guess the key question with this is, what proportion of the league thinks the league isn't deep enough to provide sufficient fun or challenge? I certainly don't think that's the case for me, but maybe there are a lot of owners who do feel that way. If that's the case, it might override considerations of dynasties or whatever.
Regarding dynasties, rather then just making assertions, let's go to the stats
Franchises listed in the order they joined the league:
T-1. Turtle Soup: playoffs in 7/9 years (vast majority of playoffs between #4-5)
T-1. Eastside Bombers: 7/9 (finished #7 the other two, all playoffs between #1-3)
T-1. Junko Thunder/Lincoln Lumberjacks: 8/9 years (plus a #7)
T-4. Otto's vall Bangers: 5/7 (most #1 finishes in league history w/ 2)
T-4. Red Capes/Yankee Quippers/Broken Ladder Belly Itchers: 0/7 (2 #14s, 2 #7s)
T-6. Xenophon's Ten Thousand: 5/6 (all playoffs between #3-5)
T-6. Maynard SilverSmiths/Auburn SilverSmiths/Auburn E-Claires: 4/6 (also had a #14)
T-8. Texas Presidents/Texas Teabaggers: 0/5 (all between #8-10)
T-8. Sweet Success/Norwood Success/Ugly Ducklings: 0/5 (3 #13s, 1 #7 [lost h2h tiebreaker for #6])
T-10. The King's Men: 2/4 (all between #5-9)
T-10. Pedro's midgets/Reigning Champs/Apple Sauce: 1/4 (3 11s & 12s)
T-12. Westcoast Knucklebusters: 1/3
T-12. Columbia Longgui: 0/3 (all between #10-14)
14. Walla Walla Wallaby: 2/2
Obviously there's a pretty strong disparity between the early and recent teams with regard to sample size, so it's hard to rank, e.g., the Wallaby's success against my own. My inclination is to give more weight to volume, so I'd rank the teams thusly:
5. vall Bangers
8. King's Men
14. Belly Itchers
There's a clear drop-off after the E-Claires, and then again after the King's Men. Given that the Wallaby have only been around for two years, I'd say you pretty much nailed it in saying 6 teams, Mike, though if they continue to perform as they have so far, they'll move up and it'll be 7 teams.
The Bombers and Lumberjacks performance is absolutely incredible. Neither has finished below 7th. I give the edge to the Bombers, in spite of 1 less playoff appearance, because in the years they've made the playoffs, they've never been lower then 3rd, which means they haven't just been making the playoffs, they've been dominating, whereas the Lumberjacks have had several years as lower seeds, but both teams have unquestionably been dynasties.
It's also interesting to note that there's a strong correlation between years in the league and success, with the Wallaby and the Belly Itchers being the only significant exceptions.