If the expectation is that appellation systems rank absolute quality, then they all--in every nation-- fail that test, as there are always wines from lowlier tiers or more general areas that outperform their higher ranked, more locationally specific brethren.
What the Italian appellation system does is address comparative quality, and I don't believe there is a single DOCG that is less stringently regulated than its preceding DOC.
So tighter regs don't necessarily mean better wine, but it does establish a higher baseline for quality and style, through things like yield maximums and minimum aging.
I don't think a DOCG necessarily favors larger producers, either, and I'm curious why Oliver would make that claim?
Yes, the Italian system is politicized, but aren't they all? Small Champagne farmers weren't thrilled with the expansion of the zone last year, but it helped the big houses. And not to pick on the French, but at least the Italians make some effort to respect the vineyard potential, which is more than can be said of the Bordeaux system that has enshrined a hierarchy based largely on just the name of the chateau.