Yes, we covered it.http://warlight.net/Forum/Thread?ThreadID=20712
No, propagating wins and losses through the rest of the field is not the cause.
The loss of points is due to the fact that 2 things happen at the same time, 1)win % goes up, and 2)average opponent strength goes down, and in ELO formula(*) sometimes loss due to 2) overcomes gain due to 1). The formula is flawed.
* ELO rating = average opp rating - log(1/pwin-1) * 400