There's not really a concrete policy. It's mostly up to whichever updater is responsible for a site's news to decide if they want to remove a player entirely.

There's 5 guys with Frozen icons for MKDD and I've rejigged the rankings to automatically place them on the bottom of the AF/ARR/PRSR. This somewhat addresses your concern, since they don't make you lose a rank, yet they are given the opportunity to prove themselves if they want their real rank back. It doesn't fix everything since their individual scores still affect people's AFs by small amounts, but likely not enough to result in changes in rank unless two players are in a dead heat.