Make the current Champion being the host City.
You guys are always finding problems when I'm finding solutions.
A couple more issues for you to solve:
1) The host rotates through the leagues. The ideas being each league gets to host once every 3 years.
2) Often teams will load up when their window is open. As an example. Acadia-Bathurst went all in last year. As a result, they won but subsequently most of their best players graduated before this current season. They won a total of 8 games this year. I can't imagine giving that team a bye to the mem cup.
The thing to keep in mind, and this is applicable when people talk about putting drafted players in the AHL, is the CHL started as grassroots organization. Often, these towns only have a few thousand people living in them.
So if you restructure the memorial cup and move drafted players to the AHL you are fundamentally creating an existential crisis for the CHL. People need step back and realize they are an independent entity and not an NHL affiliate. Their purpose is to provide kids and communities with development opportunities, not bread NHL players