The matchmaker and team-balancers do work very, very well, but suffer from a few variables that simply cannot be accounted for.
The matchmaking and balancer to not work based on a players Level. They work based on something called Match Maker Rating (MMR). It uses a complex algorithm that determines a players level of actual "skill" in Hawken, based on the rest of the player base. It adjusts every match. You can see what your MMR and what the Standard Rating Deviation (SRD) is by adding "Scrimbot" to your friends list. Just start a chat with it and type either mmr or srd to get those figures. :)
Now, the two pain points for matchmaking and team balancing:
1. There is a low total player count at the moment and the matchmaker adjusts to account for that. This way, even when there are fewer players, everyone still finds full matches to play. It's a bit frustrating, but it's actually a better thing than having a bunch of mostly empty lobbies. It will get better when Hawken gets an official "relaunch".
2. The auto-balancer does what it does very well, but a few things that people do can cause this to look like it's not.
- When players start the match before the lobby is mostly full. If you start with only 5 players, the balancer will obviously put the first player to join on the team with fewer players - if that player happens to be awesome... you see what I mean, that's the right way to handle it, but it can throw of "balance".
- When a player joins a game, where teams are even, the balancer chooses the team who is losing to get the new player. Same condition as above applies.
- If a player quits mid match, the same as above applies when a new player joins.
And I believe that is the correct way to handle both.
The alternatives, like asking players joining a match in progress to sit in limbo waiting for another player of the same skill level to join before they can be assigned a team and actually play is just going to make people leave the match and, ultimately, the game. And force switching players to other teams to create better balance mid-match is a really bad idea.