I'm a parent of an 8th grader in a "non-hotbed" area (CO), and we have grade-based teams, and compete against many grade-based teams from back East during the summer. From my perspective, the "hold back" thing is a non-issue. It exists, maybe it's not fair but as I tell our son, life's not fair. Playing against bigger/older kids will (hopefully) make him better, and when 10th/11th grade comes and things mostly even out on the physical side, things will seem easier for him.
Also, there's a difference between chronological age and physical age. I've seen 9th graders just hitting puberty who are smaller and less developed than 8th graders who are well into puberty. Sure, on average, older kids are more physically mature, but it's not the end of the world.
As far as us parents go, we talk a bit about the fact that there are more holdbacks on hotbed-area teams, but we only talk about it in a bemused sense; we're not seriously upset about it.
