That's well put and an honest point but I only partially agree.
In case of the UEFA Champions League and the UEFA cup, which nation is allowed to send in which amount of teams is based on the coefficients rankings. This system has several built-in measures to make sure every country has a fair shot at sending in as many teams as possible.
1) A victory and a draw are awarded a certain amount of points. This is divided by the amount of teams a nation can send to Europe. In Holland's case, if a victory for PSV means 3,000 points, that number is divided by the amount of Dutch clubs in Europe (7). The outcome of that sum is added to the Eredivisie's coefficient. That means that this season, Romania has been outperforming Holland massively. Why? Because Romania can only send 3 clubs into Europe and is subsequently awarded more points for a victory. It means Romania can climb the rankings really fast if they focus their energy on improving only 1 or 2 clubs, whereas Holland needs to make sure it has at least 5 out of 7 clubs strong enough for serious competition. Click here for more information:
http://www.xs4all.nl/~kassiesa/bert/uefa/
2) UEFA cup victories and draws are worth exactly as much as their CL equivalents. Again this is to the benefit of the smaller nations who obviously stand a better chance at winning in the UEFA cup than they do in the CL.
3) Qualifiers for said competitions are also counted and even get you bonus points if you qualify. It means that while Ajax and PSV are sitting about waiting for the draws, Romania already has Steaua and Dinamo earning points for playing qualifying matches. It means Holland (in contrast to Romania) starts with a deficit and have to win many, many more matches to catch up because the points are divided through factor seven.
With Eastern European clubs (most notably those from Romania, Russia and the Ukraine) on the rise, the coefficient rankings is set to explode. One lousy season could see a country drop from ranking #5 to ranking #15. Even Germany is incapable of staying above the mess at least for now. In my opinion it is only a matter of time until France will succumb to the struggle and since Ligue 1 forms the last bridge between the Great 3 and the rest of Europe, the current system provides for vastly sufficient loopholes to destroy the hegemony of England, Italy and Spain.
With that in mind, I personally belief the quality-diversity balance is very neatly organised by UEFA. And in a sneaky way because the rules make it's a gradual process. It has to be, or the G14 might breakaway. UEFA did well, they only have few options because they aren't as powerful as everyone thinks.