This competition was created in 1960 when the only competitions open to the top clubs were the league, the FA cup and those lucky enough to be involved in the European cup, Fairs cup, etc.
We have obviously moved on from those days and the pressure of competing in champions league, europa cup is immense on managers, players, etc, hence rotation system, large squads, etc, etc.
We live in a different world and the domestic cup competition that has suffered is the old league cup.
From 1960 the competition was open to all 92 league clubs, who had the option of competing or not, For example Arsenal did not participate until 1966. From 1971/72 entry was made compulsory - and from 1966 the winners were nominated for the Fairs cup/uefa cup (if they were a top flight club).
I think the time is right for clubs to choose if they wish to enter - after all do the players/fans think it is a hollow victory when they beat one of the top flight clubs (second string teams.)
Or what about restricting the competition to the 72 proper league clubs and invite the 24 Blue Square Bet Premier boys into the competition. I'm sure you will still get exciting games with a Wembley final to boot and another chance of a Wembley appearance for the good old pro in the lower leagues.