The rank ladder option is coded up under that addon (a hook within the setup wizard belonging to that addon). It shouldn't be actually, so that's an issue.
"Will high ranked users still be dropping out of that group then" - I'm not sure what you mean by this.
But yes you'd delete any that flow from Newbie and rename Newbie.
"Will high ranked users still be dropping out of that group then" - I think you mean to ask what happens to members in group X when group X is deleted. When you delete you have to choose a group where they'll be moved to. This only applies to primary (not secondarily) usergroup memberships.
The rank ladder option is coded up under that addon (a hook within the setup wizard belonging to that addon). It shouldn't be actually, so that's an issue.
"Will high ranked users still be dropping out of that group then" - I'm not sure what you mean by this.
But yes you'd delete any that flow from Newbie and rename Newbie.
Issues fixed in:
https://github.com/ocproducts/composr/commit/cbb47818121b522661664e74d7c223b54d1255dc
&
https://github.com/ocproducts/composr/commit/e9932e6d17b872a4b2f876913dd9fdfeb49caa9f