Halo 3 version of ranking was fine. Have a main rank and a sub rank for each playlist. The only problem with Halo 3 ranking was that it seemed forever to get a 50. You could win 7 games straight, lose a game, and you would need to win 20 games straight just to get a 50 from 49. It was crazy.
Outiside of that I would prefer a modified version of Halo 3's ranking system.
The problem with the Halo 3 ranking system was that people couldn't understand/accept that not everyone will reach level 50 and that most players should of reached a plateau and not rank up further.
They made it worse by having emblems that required to be a level 50 or whatever.
I got fed up of the constant "2nd accounts" where I was playing against people who were vastly better than I was because they were speeding their way up to a quick level 50.
All for vanity.
I'm not even that bad at Halo (Was 46 in halo 3) but I can see why lots of people hate the online mode, it's effing frustrating being matched against players that blow you out the water.
I've had far less of this in Reach, but what I tend to find in Reach is that the actual skill matching is quite poor (does it reset you truskill each day?)
It seems like I will play a couple of games and absolutely trounce the opposition, then 2 games in it decides I'm too good for that and matches me against people who literally rip my face open and probe me.
I prefer the Reach emblem system to be honest, but I don't think the Arena fullfilled the need for bragging rights that some people have.