I sort of understand it too...to a point. But...a BIG but, how often, if ever, has a person consistently lost a wrestle off, but went on to out perform, CONSISTENTLY, the person who they lost the wrestle offs to? To me the "familiarity" conversation works both ways...sure wrestler's get familiar with each other and what their tendencies are, but if one figures it out and beats the other person every time, doesn't that also say something about the kid that looses...ie., why can't they figure out how to win? If they truly were "better" they would figure out a way to beat their teammate.
I personally would run multiple wrestle offs if two athletes are close, and then let those wrestle offs and the results of opens determine who the starter would be, including other more subjective things like, being a leader, competitiveness, team needs, contribution to the team, moral, etc. But with all that being said, if wrestler A can consistently beat wrestler B, then wrestler A should be the starter. That is the beauty of wrestling if you ask me.