As the rules stand, I would not reenter the league, and you may not want to change them enough for me, so I will offer a reaction to the rules more as feedback.
This league first piqued my curiosity, with the possibility of dynamic free agent movement during the year, as we watched which players were doing well or poorly in 2010, and then made adds and drops from our 40-man roster based on players performance in the real-life 2010 season. The possibility of watching the guys in the minors made this even more interesting.
However the current free agent rules state that you can not keep anyone picked up during the season for the next year. Which means that player performance in 2010 (and future seasons) [b:48328eee81]will be completely irrelevant to in-season pick ups[/b:48328eee81]. The only movement of in-season free agents would be based on their cards. which we know at the beginning of the year during the draft. The in-season free agent moves will be close to inconsequential.
I recommend allowing folks to keep in-season free agent pickups at the end of the season, and allowing pick ups from he minors during the year.
Now about the free agent lottery at the beginning of the season. In my experience already has a lot of randomness, and the most satisfying rules and structures are those that create new strategy without a lot of new randomness. The current free agent lottery is entirely random, and creates only a little strategy.. However I see a good fix for this, that keeps the spirit of what you are trying to do.
If [b:48328eee81]before the draft[/b:48328eee81] you do a random process that chooses whether each player over 27 has 1, 2, 3, or 4 years left on his current contract. Then when we draft, we will know the risk we are taking, Is 2 years of Pujols worth 4 of Chase Utley? There will be all kinds of interesting strategy. And then each year, before the draft. all new free agents, and players that turn 27 will be randomly assigned to 1-5 year contracts, so you will know how many years of a player you will be bidding on. I don't think that this is the only possible fix to the random free agent lottery, but I think it is one that would work.
One other minor detail - To prevent sandbagging, I have instituted a year end lottery for the top three draft choices among the bottom dozen teams. This takes a lot of the profit out of sandbagging, which is good because sandbagging is hard to call when it is subtle. Look at the rules for the first 2010 keeper league for an example of how it works in 12 person leagues (I have done ot in one 24-person league also.
I wish you all well in the league, for me to participate, both the in-season free agents, and the end of the year free agent lottery would have to be tweaked. If they were, I would sign up.