There are some pros and cons of making Test matches 2-tier.
Pros:
Highly competitive matches among close opponents in strength.
More result-oriented test matches, will increase the interest and pull more spectators
Teams will feel competitive and ready once they reach the upper level
The scheduling would be lot easier when number of matches will increase and still players will have ample time to adjust their work life and rest days
The person who voted option 4 will request to vote again in this thread
BD has better chance to make it, look at U-19 team, we always win the plate
Cons
Humiliation awaits for big names in cricket
If by a fluke a weaker team some how gets into the upper tier and makes one top team relegated due to a series of bad tour just because the players were injured or unavailable then the whole concept of competitive test matches will go down the drain.