I think that player variance is the hardest thing for the matchmaker to account for, and a factor that makes a big difference in the quality of the match. Bronze duo'd with Top 500 is always a shit show, even if the other team has the same duo. It don't think it can be made to work.
(My experience shows this is the case; quickplay matches, with no grouping restrictions, are always more of a shitshow than ranked, which has some grouping restrictions.)
Similarly, an individual's performance variance makes a big difference that a mere arithmetic average can't account for. A 3900 player probably plays like a 4100 player when fresh and warmed up, but like a 3500 player when drunk, sleepy, and mad. The actual SR/MMR will converge to a time weighted average of those two states, but if you're in a 4100 game with that player when they're in their 3500 state, it's probably unwinnable. Maybe the matchmaker could attempt to predict this, but it would probably make people mad. Personally, I think that's the nature of a 12 person game composed of 12 randos. There is very little an algorithm can do to tune that (short of changing abilities/hitboxes/cooldowns of each player, which would make people mad).
Then there are people that abuse the matchmaker by exploiting uncertainty in their favor (creating a new account). Every time I have played in a 6 stack in ranked, we've always played against 6 brand new accounts that are clearly better than the matchmaker thinks they are, which sucks. (In quickplay, I generally have very good games in a 6 stack though.)
Overall, I hate to say this, but I think they're doing the best they can. I don't think there's enough data to make a good match 100% of the time, which is why people find 11 players and play "scrims" instead of ranked/quickplay. I don't know where you're able to see other groups and decide that they're a suitable match -- 90% of players have private profiles, and those that don't only play like 10 ranked games a season, so you can't really gauge how good or bad they are from public data.
(As for brits and aussies joining your west coast games... people VPN in to do that on purpose. Legend has it that west coast gamers are better than east coast gamers, so people all over the world VPN to the west coast and make it a self-fulfilling prophecy.)