Really I would say it depends on the styles
Are they both TKD styles? In which case competing as a black belt would be maybe a little bit more fair.
However,
It is a slippery slope, if we start taking people past into account then what about people from other less related arts... boxing for example?
Further to that, what about people who are just natural talent? I know of a couple of guys who were international class at maybe blue belt (ITF style).
It would be very interesting if people were placed according to ability rather than grade. We just erroneously assume that lower grades always have lesser ability. While there is reason for that and experience does count for a lot we can't always say that a yellow belt can't spar well.
All in competitions would be very interesting.