The problem with this concept and even the current UEFA model for that matter, is lets say
@Evilo that Poland, Bulgaria, or hell lets include Liechtenstein as well that they have their golden generation years producing a lot of top quality players. The problem is keeping them within their country's domestic league (it's the same problem we have in hockey for the non-traditional markets). For example a lot of Dutch and Belgium hockey players that turn out to be good, tend to play away from the country and in better junior leagues like in Germany. Those players eventually play enough in the German junior league that they get qualified to play for the country and choose them over others. We also see this all the time regarding Arab players either playing for Germany or Spain instead of their country of origin in football too.
Now going back to those nations, a club like Lech Poznan, which would be eligible for either your ESL or CL have a hard time keeping the best Polish players. Lewandowski wouldn't play for them, Milik wouldn't play for them, Piatek plays in Germany, Glik played in France his entire career, and others. On the actual Polish team, there are like four to five who actually play in Poland and majority of them are non-starters. You have to find a way to keep a lot of the good players like Polish, Bulgarians, and Liechtensteinians in their borders to increase competition throughout Europe.