Your system has some merit, based on the theory that horses which do not race well first up, and second up are a little "flat", so logically third up they should strip fitter. I think you can't back every horse in this way, but by applying some small filters, you may be able to sort the wheat from the chaff.

E.G.
1. Regardless of how it finished in it's last 2 starts, if it's third up it becomes an initial qualifier, but not won in those 2 starts.

2. Has it won in this class previously in it's career, and within 200m of today's distance?

3. Is it's strike rate greater than 25%?

3. Does it's average prizemoney per start rank in the top third of the field.

What do you think?