I agree, the quality of applicants is not what I would have hoped for this year. There are people in the middle third of my class that were interviewing at some very esteemed programs. And yes, I did meet some FMGs at a top-5 program interview. This is not meant to slight FMGs, but realistically, in more competitive years I doubt that they would have been received so well.
I don't think that the answer is a return to the pyramidal system. I believe this would actually cause applications to fall further. Surgery residency is difficult enough, without adding another level of competition amongst peers. I don't see how a fear of not progressing to the next level will help increase the number of applicants.
Speaking with other applicants on the trail this year, it seems that some of the more sought after programs are attempting to make the surgery residency more humane. Some hospitals have sucked it up and are hiring PAs to help reduce scut. A certain amount of scut is necessary for our education, but I'm guessing that there is also a lot of scut heaped on surgery residents (and residents in general) because they're cheap labor. It's not an inexpensive solution, but a successful formula seems to be hire PAs to help with day-to-day scut and there will be more competition for your surgery residency positions.
Another solution that I've heard tossed around is an overall reduction in the length of the surgey residency. Do folks planning to continue into surgery fellowships need to complete the full five years? Some subspecialties think not. Many plastics have been making the move to integration, and I think CT and vascular are considering it. Keep the full five for those who want to enter the world as general surgeons, but cut out that extra time for those who have no intention of doing lap choles or even whipples after residency. Take these subspecialties from 9-10 years of training (including 2 optional lab years) to 7-8 years, and I think you'll see more people applying.
Even if worse comes to worse, if PDs continue to clamp down on the number of available spots, having fewer surgeons will drive up salaries. Like it or not, this will increase the number of AMG applicants. Unfortunately, this could be a slow process. Meanwhile we'll ride out this cycle.