It makes more sense to get everyone actually playing a similar number of test matches first.
What is there currently 12 test playing nations? You either have a tournament like you've suggested, 4 groups of 3, first in each group goes in to a straight knockout last 4, winners play the final.
Or if you make the championship two tier, everyone still plays each other but say Australia beat Zimbabwe it's reflected in points so they'd get less than beating India. Obviously it'd have to be fair with every top tier nation playing 2 second tier sides or whatever.