I realize that the current debate is over TRAD leagues, but as I expect the policies will carry over to the RTs, I'll chip in.

There is no right answer regarding what teams are most deserving of high picks. I took over a bad team which still has among the lowest PBV in my league (at 58, I think its 21st in PBV), but I mananged to make the playoffs. Picking low, based on record, in the Contraction draft will be a big setback as many better teams will pick ahead of me (I'll finish about fifth in record). But using PB value has fairness issues too. The lowest PBV is not necessarily the worst team for a variety of reasons. Also, PBV may change dramatically from one year to the next.

However the order is selected, we should be careful to not let the Contraction Draft over-correct competitiveness. The first few picks will be far better than following picks. Even a bad team can add Bonds or Sosa and become an immediate contender. A contraction draft will drasticly alter the power rankings in the league. This can be mitigated somewhat by having at least a surpintine draft. The first few picks will be more valuable than all the remaining rounds together.