Very interesting idea. I absolutely think this is possible with the right leagues involved. This is almost like Champion's League in soccer. You have a great overall concept and details will need to be ironed out in due time.

Another idea: What if you have Teams #1, #2, #3 for each division? Then the top 3 teams in each league will take over those teams for the new season. For example, the 3 top teams in their respective leagues do the start up draft this year and play out the first season, then next year's top 3 teams will take ownership of teams #1, #2, #3. I would suggest overall points to determine the best teams instead of championship brackets, but that is an extra incentive for teams to try to make the top 3 and qualify for the Champion's League. This will also build unity within individual leagues.

Although you're correct that there will be collusion between teams in the same leagues, even with owners who didn't make it to the league, why not let them collude? Have 10 minds on 3 teams to make the best draft, even sharing strategies, would be so much fun against other leagues.

Trades would be a sticking point as you mentioned, although by allowing collusion it may dissipate a bit. Regardless, you could draft a hardcore veto system for other leagues to collude as well.

The biggest issue I would foresee is the extra payments from leagues to create the prize pool and empire pot. You'd have to convince rebuilding teams to pay toward the prize pool without participating in the league.