How can XC make sense in being the fare setter for journeys between south Wales and places north of Crewe on the WCML or even Edinburgh? Firstly, it does not operate any trains that link these places directly. The nearest it gets to a total Cross Country service between Edinburgh and Cardiff is the 13.05 from EDB with a change at Birmingham to a Nottingham to Cardiff XC service. This total journey takes a whopping 7 hours 21 minutes. A 9.05 departure from EDB on XC direct to a change at Bristol Parkway via Newcastle would mean a journey of 7 hours 2 minutes to CDF.
The fare is valid via Bristol/Gloucester and then XC's main route via Birmingham, Sheffield and the ECML. People would quite rightly complain if it wasn't valid that way, as there will be times when it's quickest (e.g. engineering works or disruption on the Marches Line), or they may simply prefer to take that route for whatever reason. But having the validity on the XC route means that it also has to be priced accordingly with the likes of Bristol fares to avoid anomalies, and thus it makes perfect sense for XC to set the fare.
You also have to consider the fact that, at the time when fare-setting responsibility was distributed between the Train Operating Units in preparation for privatisation, the service along the WCML to Edinburgh was much more limited than it is today. The ECML would probably have featured more frequently as the fastest route for getting to Edinburgh. Fares to Glasgow are set by Avanti because there's always been a reasonable service there along the WCML.
Now you could argue that Avanti should create a new 'via Carlisle' fare for these sorts of journeys. That division between the WCML/ECML does exist for fares from Warrington northwards, with LNER setting fares that are valid on the ECML and Avanti ones that are valid on the WCML. But there's nothing forcing Avanti to do so, and indeed they would probably prefer to manage the demand by means of Advance tickets.
ORCATS is therefore wrong as XC are not the fastest between south Wales and places north of Crewe - including Scotland. Using The Marches can also result in only one change. (Some schedules suggest going into Manchester and then using Trans-Pennine Express).
ORCATS is a system for distributing revenue. Again, it has no connection with who sets the fares - they are two completely separate issues. As you have said, with the modern day timetable, going via the ECML is rarely fastest and so XC probably get little of the revenue. But as explained above, it still makes sense for them to set the interavailable fare.
Mention has been made that many people don’t know about split tickets. I know of someone who wanted to go from Cardiff to Carlisle. Seeing the ridiculous fare set by Cross Country, they decided to drive. As I have said before, people going between south Wales and Edinburgh will probably fly with Easyjet from Bristol as it is far cheaper than travelling by train. Lumo now run lower cost train travel between London & Edinburgh in order to compete with air travel. Clearly ORCATS and XC are in favour of encouraging air and road travel?
Rail is never going to compete very well with flying for those kinds of journeys; it is simply too slow. And arguably it would be wrong to offer a bargain basement fare that competes on price, as that means that there's a seat taken up that now can't be used on the many intermediate journeys (Bristol/Cheltenham-Birmingham, Birmingham-Derby, Sheffield-Leeds etc.) that make up the majority of XC's passengers.
It would make little difference if the fare were set by Avanti. The Off-Peak fare would be broadly the same; the main difference would be that an Off-Peak Single would cost less, as Avanti have reduced the price of theirs to 70% of the Return.