The ideal situation is to play against people of higher rank. You will not climb the ladder otherwise. The player at #1 should not even play, as there is nothing to gain.
This isn't really true. The player at #1 still can gain elo to run away from the second player. He is going to get less for win than he loses for loose, so it's a little uphill, but if he plays mostly against worse players, especially at the hours where there is less players playing, he can get enormous elo. The example could be paul's stats before his ban.