Agreed. Once a team is granted test status, then it is permanent. Only in the case of Zimbabwe, the status was suspended for a limited duration. Right now we have got 4 good teams at the top (India, Australia, England and New Zealand) and then 5 other teams at the bottom who are unable to compete with the former group. And then we have 3 who are there just to make up the numbers (Zimbabwe, Ireland and Afghanistan). I have long argued for three divisions of 5 teams each, but it will never be implemented by the ICC.
I was thinking of writing detail post on this topic but already found excellent article. Following articles got tons of info on Problems of WTC and test format. Some good suggestions are mentioned, highly recommended.
https://brokencricketdreams.com/2021/02/27/make-test-cricket-great-again-restore-the-soul-of-this-wonderful-sport-part-ii-the-problems-with-test-cricket/
https://brokencricketdreams.com/2021/05/28/relegation-promotion-proposal-in-world-test-championship-make-test-cricket-great-again-part-iii/