I really, really, really, really, really wish there was a constraint for automatch that was something like, "Only players between Level X and Y." I almost always decline low level games because I have far more to lose than gain by playing them. The only card I refuse to play with is Possession for reasons I don't think I need to explain. If I'm getting too many of them, I'll leave the queue and simply propose a game (which people are less likely to accept, it would seem).
Actually your possession declines aren't obvious to me - I don't get why people dislike the card more than your average alchemy card, curse-giver, or masquerade, really - but then, a lot of people feel the same way you do, so there must be something that I just don't understand. But also I don't think declining low-levels is all that great either. If I'm automatching, I always hit accept, unless the guy has not accepted a couple times and I'm trying to move on and get matched with someone else. If I care about levels, I go with the proposal system that was all we had and seemed to work well for so long. If your logic for 'what you have to lose' against 'what you have to gain' were followed by everyone (to an extreme), nobody would play, because the higher person always has more to lose. To a less extreme extent, it would simply make everybody play against those near them, but that degrades the experience somewhat for everyone. We all started at level 0. And if the rating system works like it should, it actually shouldn't matter who you play against, you'll expect to get the same rating adjustment (0) out of everything.
By the way, what's your cut-off for 'low level games'?
Also, I want to make clear that I'm not trying to say that you are at all wrong in what your doing, just that I don't think it's the best policy.