On Blizzard it didn't matter who was queuing(even in RBGs), the highest rate was always chosen.
Also, you're contradicting yourself, since you're complaining about their gear while you have gear, and they also lost to a 550/496 comp, which means that their rates match their skills.
Still, the MMR system is indeed broken(works, but very poorly, like, 5%).
One of the main problems though is that there aren't as many teams as it is intended for the mmr to work like Blizzard, there must be like ~~15 or ~~20 queuing(probably less).