Think of it this way...

Imagine that you are in Area C. Your open-class band is on the bubble of being one of those to qualify for state.

If the number of advancing bands was determined by how many attended instead of how many qualified, then your band may potentially be shut out of state because some other director decided to enter the region contest with military intent. Or decided to forego area altogether (which is not unheard of). Is it really fair for your kids to be blocked from going to state because the new director at East Fork Consolidated decided to march military this year?

Since Area C was mentioned in the original post, the OP is probably aware of how competitive Area C is, especially at the AAA and AAAA level. Even with military bands being counted towards determining the number of advancers, there are several excellent bands left at home every year who would likely have advanced out of any other region.

Bottom line: I don't think that anyone is being penalized under the current system. I think that some well-qualified bands would be prevented from advancing to state if the rules were changed to count only attendees in determining the number of advancers.