I think seniority is just the fairest and most transparent system. It is not by all means perfect, but when you join a company that uses it, at least you know what to expect and you know how things are going to be dealt with.
With regards to unsuitable FOs.. No one gets dropped. Every few months the command selection board review the training files of any FO who has bid for a command (that also includes any FOs who previously failed the course or hadnt yet achieved the standard)
Now what SpGO says about easyjet and madrid is out of order. I'm just wondering if there is any other system out there that actually works and people are happy with!? I doubt it though