I'm not bothered by "sandbagging" because if you've got the goods you win your games, no matter who you're playing. In one on one situations I usually look for players who are higher rated then me anyway, since the benefit is greater and the cost lesser for me. I loose more games this way, but it also allows me to experience better play. In the long run, I've have become a better player, and my rating has gone up.

The thing that annoys me more on this site, are players who consistently wait until the last minute before making a move, or who vacation for days as a strategy for trying to catch their opponents off-guard. This is a really stupid thing to do. Since chess players are often quite passionate about the game, anyone who is good enough to inspire this strategy in others, is probably also checking his/her games almost everyday. I know I do.

Best way is to stick with a known group of friends like our Circle mate, not as much variety, but people to be trusted,

In real life OTB chess, this is called "sandbagging." It's part of the reason that there are rating floors (once you hit 1600 you can't go below 1400, etc.). In addition to that, tournament directors can force you to play in a higher class if you were higher rated recently. 

Very interesting; I have thought this myself. You have a real point. I know that players do deliberately lower their rating so they can join, but I don't know of anyway to ban or block other members from a tournament. Maybe this will come along as another feature, and then the tournaments can become more targeted.