One team trades their benefit with another teams. Hence, no competitive balance issues for the league.
Of course the person buying the 1 slot has better assets now, but that doesn't change the competitive balance of the league. Why?? Because SOMEONE has to get the 1 slot, right? Neither roster is gaining anything, however one owner is gaining value while the other owner is losing value (theoretically).
It's nothing more than owners changing teams. Again, this is NOTHING like the example of one team buying a player from another team for money.
Also, there is no money being exchanged for assets. As in, there are no assets moving from one roster to another. The owners are changing which team's they control. That is NOT the same thing.
Competitive balanced leagues are designed
to exchange a type of "buy in" ( which would be the league's annual fee to participate, if it's a money league)
for a set form of "league currency" to use.
The "buy in" price is equalized. The "league currency" is equalized.
If the league has, for example, a 500 dollar buy in for the whole season, and it's a dynasty with a salary cap and FAAB, then the league currency is equalized cap space per franchise, equalized draft picks distributed (people may trade their picks from earlier or for future seasons, but the exchange value is still locked into the league's internal currency system) and some set amount of hard cap space.
So if every team gets 150 in FAAB dollars to use during the season, the "buy in" purchases that. It also purchases an equalized number of draft choices.
Once you introduce "value" OUTSIDE the league currency system, you've disbalanced the league.
If the league constitution says each owner has an additional 200 dollars in real cash to add into trades, in whole or part, and each owner could be verified in having 200 dollars to spend like that, then that's a different matter. That becomes a function of the league's "currency system" in place. It's not conventional, but it's EQUALIZED. It's been discussed and voted on beforehand. People understand it's existence as part of the expectation.
I'll give you an NBA example. Gail Miller and the Miller family, when she owned the Utah Jazz, was encouraged privately to trade for Chris Bosh. Because the Miller family was hitting some hard financial times ( relative to an NBA owner, no one was going to starve here) The reason to do the trade was that Bosh's contract was being covered, in part, by insurance money, because he was ineligible to play because of his health conditions. Bosh's contract, on it's face, met salary cap requirements to hit the "salary floor" but the actual cash payout by the franchise who held his rights for far less. So if you are paying someone 20 million a year against the salary cap, but only are paying an actual 10 million in cash because 10 million is covered in insurance, you have found a way to game league requirements to have a minimum team aggregate salary floor but save cash in real life. What if Mickey Arison of the Heat said, "Trade me two future first round picks and I'll trade you Bosh, and the net savings will be 40 million on the rest of his contract in cash" Do you see the problem here? A owner who is seen more as "cash rich" is using value OUTSIDE of the league's nominal currency system to take advantage of a team who is seen as "cash poor" in a relative sense.
This is why actual professional sports leagues have so many rules and conditions in their CBAs, to prevent owners like Cohen from the Mets, or Ballmer from the Clippers, or Dolan from the Knicks, using their personal vast cash leverage, to give outside value to acquire league renewable internal assets like draft picks, young players or cap space.
In order for your "pay for pick upgrade idea to work", everyone needs to have real life cash to spend on potentially upgrading their picks, and everyone needs to have the same opportunity to offer cash for that upgraded pick and the league constitution needs to spell out the rules around how that can happen.
As for your Scenario B, where two teams trade their entire franchises, odds are one will be in a better position, and that just won't cover the smell test to most fantasy owners. Why would someone take a worst team than they have right now? It does not look above reproach, so most leagues, to my viewpoint, would not allow it.
It's like a zombie movie. Did you get bit by that zombie? Or did you scratch up your arm real bad jumping over that fence? Well I can't be sure, I won't take the risk. So I'm shooting you in the head. Since I'm practical, I'd want to save the ammo and hit you in head with a hatchet instead. Same principles apply in money leagues. Can't be sure it's on the up and up? Then leave the league. Even if it's "clean", if it looks even a shred of dirty, people will leave. Do you want to be the guy who spent 200 dollars to upgrade picks in a league that just lost 8 owners over it?
If you want 200 bucks in real life optional cash to be part of the equation in any deal, you need to make real life cash part of the league's internal currency structure. For everyone. Saying "Anyone can make that offer" isn't enough. You need a formal allotment created, stored, itemized and recorded with transparency. For every team whether they use it or not.
Be the owner who takes advantage of all OPPORTUNITIES presented in front of him in the pursuit of winning, competitiveness and fairness. Don't be the owner who is constantly looking to take advantage of the SITUATION. There's a difference.