I started a USBC sanctioned scratch/sport league this year. We have 21 bowlers (seven 3 man teams) and no prize fund. The lack of a prize fund is what makes things better imo. No one cares about "winning" the league and since people don't care about winning the league, you can bowl with whoever you want and have some fun. No worrying about a draft, average cap or anything other than just bowling with friends.
People of all averages do want a challenge, but the lower average bowler views scratch leagues and even more so, sport leagues, as a way for good bowlers to kick their ass and take their money. Removing that "you suck so you lose" factor seems to be attracting bowlers of all averages. The lowest average bowler we have is a 196 THS average...he's at 140 in the scratch/sport league and he's having a great time.
We do run pot games and brackets for those who want to mix things up a bit, but no one is forced or guilted into entering those.
Something else that helped bring people in was the fact that the USBC removed the extra $15 sport sanction this year.
We'll see how things go as the year progresses.