I know at least four teams that started their BB career in division III so it does happen. I have not heard of a division I or II bot team being replaced by a human, that would be a masive advantage for that new player. One of the guys I know joined up in division III in the last week of the season I think, got relegated (because it was too late to buy players) and that was his division III career.
I think the current system is fine. This is a game all about human vs human, if you want human vs computer there are loads of other basketball manager games that no-one plays.