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P4P is subjective and essentially imaginary. I've always looked at it as skill for skill. Who's skills and abilities would translate to being the best fighter if every fighter was the same size, strength, etc. But because it is subjective and purely hypothetical the rankings are able to include any relevant competitor from the sport at any weight or gender.
I think that your way of looking at it is rational (and probably what the people at the UFC offices are thinking in their p4p rankings), but it is not in keeping with the wording "pound for pound", which is what makes the TS's point valid.