This thread has got me thinking about the etymology of the term sandbagging in this context. Without actually looking it up I suspect that it must have something to do with hot air balloons and the fact that sandbags are what is initially used to hold them down while they're being inflated.
Any other theories?
I don't mind the floor concept, but it would need to be tied to average recent performance, not all-time highest rating. The player who leaves for a time and comes back rusty aside (I agree, that's weak in and of itself), there are often people who have streaks and spikes that are well ahead of their true ability. This is especially true of newcomers to the site who frequently start at 1200, bang off 3 or 4 wins (or even more) against people who are starting out with similar (but unearned) 1200 ratings and now this newcomer suddenly finds himself a 1600 rated player when he's actually playing several hundred points below that. Eventually, the odds will catch up to him; it may take him a loooong time to reach again his 'highest' rating. In the meantime, by your proposed system, he would be ineligible for any tournament at his true level.
Even seasoned 1800 players have had brief winning streaks (that included those 2 or 3 lucky time-out wins against 2000 players) that catapult them up to a 2100 rating they'll not see again in the foreseeable future.
Perhaps a better concept would be that tournament eligibility is determined by a floor based on your average rating for the few months previous to the tournament. That way, the only people that could sandbag and get in would be the people who deliberately kept their rating low all the time just to win low-level tournaments. I have to think the satisfaction derived from that is so small as to keep this kind of player encounter fairly minimal.
As an added buffer, perhaps a separate 'tournament rating' could be added to each players profile based on tournament performance which could constitute the basis for further tournament eligibility. Thus, people who were rated 1400 but mysteriously played at a 1700 level in tournaments would be required to enter 1700-rated tournaments.