Dota does it correctly, if you cut off the top 40, tou would see a new meta game develop around the available champions. The tier list would not have the same ordering as the bottom remaining champions, as some of them are better suited to combat the removed 'meta' champs, and visa-versa.

I've been wondering if a MOBA could use a balancing algorithm, and tweak a pre-configured variable character stat if a champion becomes too popular, too high win ratio, or too weak.

Even more interesting IMO would be a stock market, where players can spend in game (or real) currency to manipulate the power level of their favorite champion. Over time, people will bid against overpowered champions and their numbers will get tweaked downwards. You might see certain champions that people consistently choose to invest in (to buff), but it will be an honest measure of the popularity of the champion and can be combated if enough of the player base hates it.