The op is a Legend playing in Rookie paying 10c to do so. You're not with him at all, in fact you'd like him to be forced to play in Veteran and pay 500c to do so.
The entry fee for Veteran would remain at 100 credits, not 500. So, under my scenario, the OP would pay either 100 credits to play in Veteran or 500 credits to play in Expert.
You'd like a TM to play from the same tees as a TL and pay 500c to do so.
As you said earlier, Veteran plays from the Master tees, so they'd be tees that a TM would be used to playing from. And again, the entry fee in Veteran would remain at 100 credits, not 500.
Yes, the OP would be paying more credits (100) to play Showdowns. And as a Tour Champion, you'd also have to pay more credits (500 in your case) to play Showdowns. I'd be OK with that. You could certainly choose not to play if you felt the entry fee was too high.
Again I think that would be guaranteed to reduce participation.
Maybe. Or maybe you'd see increased participation, especially from lower-tiered players who, like the OP, feel that they have no chance to win prizes under the current scenario.