Here's how I see it: the earlier versions of the league had appr 96 fewer picks. You added 31 extra players. This is why there are complete dregs in the later rounds. Here's how I would go about to re-balance everything:
1) Drop 1 pick per team. Teams like the Expos and Yankees don't really need to add 5 more players and there's no need to dilute the '94 talent too much by throwing in a boatload of extra players.
2) Add 5 position players with a salary between $4M and $4.5M and 7 more between $3M and $4M
3) Add 3 RP's between $3M and $4M, and another 12 evenly distributed between $1.5M and $3M
Then I would throw in 2 200 IP SP's in the $4M range.
This leaves us with about 142 total picks. There are ~ 55 draftable all-stars and 60 additional players (with about half of these guys being mediocre), and the last 27 come from the 4 unused teams.