I'm not a dueling fanatic, so don't get me wrong. I also don't play a lot of Facebook games, so I can't evaluate your contention that the duel system is broken. But let me put in my 2 cents (or whatever the local equivalent is ).
Rewards: From what I have experienced and been told, the higher the player level the greater the non-glory reward.
The glory gained/lost is available to you if you put your cursor over the "Attack" tab.
The penalty for attacking much lower ranked players is twofold: Much lower glory gained if you win (and you have a limited number of duels available unless you want to spend diamonds), and greater glory lost if you lose. Plus you can only attack each player three times a day (outside of counterattacks).
Glory is for more than bragging rights, unless you don't care about the Successes involved and their rewards.
As for there being no benefit from attacking higher ranking players, you just have to compare your abilities against theirs. Then you see how much glory you gain for a victory and how much for a loss. There are players out there who are higher ranked that I can beat regularly (not many, but a few), and then there are the ones that if I win 1 out of the 3 attacks I come out ahead in glory. Again, if you don't care about these success rewards, it doesn't matter.
These are just my opinions, so take them for what they're worth. The big thing is to enjoy yourself. It is only a game.
Rosy