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Don't players lose the benefit of higher ratings when all of the propagators shoot well in a round, thus depressing the course rating for that round?

In theory, yes, but it has a very low probability of happening. We know that a propagator will throw more than three shots better than their rating about 1 in 6 rounds. We calculate ratings based on at least 2 propagators. And normally, we have more than 20 in most events. But let's say we just have 5. The odds that all 5 propagators will shoot more than 3 shots better than their rating in a round is 1 in 7776 rounds (1/6 to the 5th power). If we rated 100 rounds a year with only 5 propagators, we would have just one round in 78 years with all 5 propagators shooting more than 3 shots better than their rating.