I hope you don’t mind me interfering - it’s really none of my business since I don’t intend to play, but I do have some experience with chess rating systems.
I see a few problems with the system proposed:
(a) The explanation and examples suggest that it’s actually better to lose against a lower rated opponent than against a higher rated one. For instance, if your rating in the first example would have been 110, then we’d see (changes in bold):
My rating = 110
Zhuk (My opponent) rating = 125
I win
My rating change
125-50 = 75 + (100*1) = 175
175/10 = 17.5
110+17.5=127.5
Zhuk’s rating change
110-50 = 60 + (100*0) = 60
60/10 = 6
125-6=119
So Zhuk lost an extra point because he played a stronger opponent than in the original example. This effect becomes even stranger at lower ratings, because from what I understand of the calculation, it’s actually possible to gain points by losing to someone rated at 40.
(b) The method adds points to the rating pool as a whole. In the above example, you gained more points than Zhuk lost. When that happens, all ratings tend to drift upwards over time - it’s happened with international chess ratings as well. The effect seems to be rather strong here, and that implies that players who play a lot tend to get overrated as compared to those who play fewer games. Some say that it’s good to “reward” active players by doing that, but it’s contrary to the principle of rating lists.
The basic thought behind a rating system is that it’s not a competition, but a statistical tool to compare relative playing strengths. That implies that the system should be able to compute an expected average outcome for a game between two players on the list. In other words: if everyone keeps playing at the same level as when they started, that expected outcome will be met, and the ratings will hardly change at all. Conversely, a player who improves and achieves better results relative to the others in the rating pool, will move up.
The FIDE rating system used in chess works like that, but it’s a bit of a pain to do the calculations. If you’re interested, I can suggest a manageable alternative that works in approximately the same way but is much easier to understand and calculate than the FIDE ratings. It would be a simplified version of a system proposed by Jeff Sonas, an expert in the field of chess rating.