The fact that in the EC, there is a small chance every time that even one of the favourites will be eliminated in the 1st round is great, this is interesting, this is fun. For me this is an advantage for Europe compare to Asia, not a flaw. It means top teams can't just blunder games and still expect to continue like that to the 2nd round and so on to the final four, the path is important too, you really can't relax untill u reach the final four and then just try to be clutch in 2 games.
But it's not a small chance. I showed the cases from the last 3 European championships. I actually didn't know how common it is until I checked. I think chances of upsets are a nice part of every game, but I don't think on the current structure the chances are small. I think it's also related to the fact that the ranking system of NTs is somehow broken, and should probably be based on more than 2 seasons.
Most top teams in fact do continue to the 2nd round, if half of them were eliminated then one could argue that something is wrong, but thats not the case.
Increasing the total number of teams that continue to the 2nd will just be boring, it will only favor top teams, there will be zero chance they will be eliminated and they will just play TIE every game to get ready to the 2nd round. I don't want that.
If a certain team is truly a favourite to win the EC, it can't lose twice already in the 1st round. I love this about the EC, you have to be consistent throughout the whole championship, you have to start strong right away.
The Team that wins the EC is always one with a great roster, but it also managed to be consistent through 2 rounds.
2nd round right now in europe is also very challenging in most of the games, look at pool H right now, except Bulgaria, this pool is insanely competitive. This situation that in europe you usually have only one or two weaker teams than the others is much better than Asia for example, where they have at least 2-3 teams that are no competition to others. This is much more fun and interest for europe and as an european, i wouldn't give that up.
Just get a ranking competition for those who were eliminated and its perfect.
Of course that half of the favourites won't get eliminated every year, they are still the strongest teams on the continent. I showed teams that were doing great on the WC and then completely failed on the EC a season after. If you think it makes sense for those things to happen on this magnitude every season, that's ok, but you don't need half of them to get eliminated to call it a phenomenon.
In the second round this season there are 4 teams who have absolutely no chance of reaching the semi finals. The first 3 on group G were practically decided so there are even no WC qualification chances there. On group H, I'm willing to bet that on the semis it'll be two out of Espana, Deutschland and Italy. We know in real life, I'll give you 10 to 1 rate, will take this bet? I guess not, because it's easy to write, but it's also very easy to see that it's not really super competitive.
But your suggestion for the teams that get eliminated is interesting, I have some other ideas for it, will write it later today.