I don’t think they necessarily “punished guys for not wrestling,” moreso the lack of wrestling enabled other guys to compile similar resumes.
For example Camacho got to #1 by beating Ramos, but then Provo beat Ramos as well as multiple other ranked guys at CKLV.
I think one thing that you can probably debate with Flo rankings is how much should last year results count. With Hendrickson, when you consider last year he still has a far better resume than everyone below him. Provo/Camacho was unique since Camacho didn’t wrestle last season and Provo is clearly much improved.