Well, in their defense, it almost made sense 50 years ago. Then somebody decided that consumer protection wasn't important enough to justify keeping up with the times and technology.
If it were me, I'd draw a 50-mile bullseye around every full-power TV transmitter in the country, and if you're inside that bullseye, you need to have that service available to you via FCC Must-Carry rules. If you're within 100 miles of the same tower, you'd be eligible for that service (maybe for a fee, maybe not). If you meet neither criteria, you should be able to get something like current Distant Network service, but still bound to the closest full-power market. Or maybe you're right, and they should just break down all of the dams and let it turn into a free-for-all like they did with everything else that's led to our current economic state.
I don't know how organizations like MLB and the RSNs would fit into this scheme, but once broadcast service rules are figured out, premium services would at least have a guideline.