He's correct, after talking to Chris at APPA, he confirmed that if a team came in the top 50% or so in D4, they would end up ranked D4 after a couple events. But, if that's the case, it's probably where they belong skill-wise.
A solution if this becomes an issue for more than a handful of people who are good players, yet unable to field a 5 man team might be for us to create a D4 3-man division. It's something I'm willing to do, if there's a real demand.
To answer the question, you wouldn't be able to finish out 3-man...
The rules are in place to protect the true d5 3 man teams that are just trying tournaments for the first time. If you have decided to step up to 5-man than you are past that beginner level.