I looked back on the last few seasons and came up with parameters that I think make sense regarding if a team should be in the play-in. I think the right parameter would be a record of at least 34-48 or at least 4 games from a team in one of the top 8. If your record is at least 34-48 and you are more than 7 games from a team in the top 8, you are also out.
so looking at the play-ins post bubble (and with full 82 games)
2022 East - Hawks and Hornets both in at 43-39
2022 West - 8th seed Clippers were 42-40 so Pelicans in at 36-46 and Spurs out at 34-48
2023 East - Raptors 41-41 and Bulls 40-42 both in
2023 West - Pelicans 42-40 and Thunder 40-42 both in
So the last two years, using fairly reasonable parameters only the Spurs in 2022 would have been out.
Going back before covid (so full seasons)
2019 - East both in, West both out as the Clippers in 8th won 48 games and neither 9th or 10th was at least .500
2018 - All 4 in though the Hornets just got in at 36-46 with the 8th seed being 43-39
2017 - All 4 in though the Pelicans just got in at 34-48 with the 8th seed being 41-41
2016 - Kings out in West, other 3 in
You get similar results going back further, where most years you get at least 3, often 4, but every so often 2 teams are really bad (or the playoff teams are all really good).
I just think that is a better result. It keeps teams engaged, but doesn't "punish" a good team in favor of a bad team. Even this year as bad as the Bulls and Hawks have been, they are actually on pace to be in the play in using those conditions, but I still think it is the better move to do something.