Had to look.  the two-class system has been in effect since 1994.   For some reason I thought it started earlier than that.
All I know is that I went to college with a number of guys from the Iron Range - Hibbing, Mt Iron, Chisholm, etc.  During the State Tournament, if they couldn't get tickets, they would basically buy enough beer to sink a battleship, and park themselves in front of a TV for three days.  
As far as the format, there have been Class A teams that could have played with the AA schools in certain years, but most years, I think the AA schools would have dominated.  
I know people romanticize the plucky small school beating the big Twin Cities powerhouses, but I just don't think it would happen very often in today's game.   I can live with two classes.   Now, you can certainly question some of the other sports.  I would have no problem going back to 3 classes for basketball, and cutting back on the number of classes in football.   But, that is not where we're headed.  In fact, some of the remaining two-class sports are pushing to go to three classes.  My brother is a track and cross-country coach, and he is not in favor of three classes, but he says there is a lot of pressure coming from some coaches to go to three classes in the running sports.