Well this is just the first splatfest result we've gotten. We can't automatically call it complete bunk just based on a sample size of "One", and then there's the fact that if we remove splatfest entirely, there's going to be a need for a replacement event. that said, I know adding popularity vote to the score makes the results more interesting, but it also makes it seem more unfair. Cat's needed to win 60% of games in order to overcome the initial popularity barrier.
I don't think having more people on your team affects win percentage noticeably. From what I feel and observe, Matchmaking is done on a first come first serve basis. Teams are made, and then paired against whatever other teams are made ready within the 100 second time limit. Only once all of the Cat teams are taken does it become a dog eat dog world, which means it's incredibly unlikely for a player to be completely shut out of the system where his/her games count towards the total percentage.
I expected Dogs to win out on popularity because nobody understand the subtle greatness that is a cat's love and because dogs have been bred to have their instincts remove (and are therefore safer for children growing up) but I was still floored when I saw the "3" pop up in the ten's digit place.
In any case, the results of this splatfest have only given my stronger feelings for the game, and for Callie and Judd.
Edit to respond to Edit: It gets explained more once you hit level 20, but basically each equipment is tied to the Primary slot. You can't change the primary skill of the piece, but you can use snails (or pay spyke 30k gold) to either add slots to a piece of gear that only has one or two slots, or if it has three slots, you can roll it to change all three subabilities at once. You can't do anything if the gear has three slots but some of them are locked.