End of season MMR
Decay only changes your “visible” or “reward” MMR, not your actual matchmaking, which uses the undecayed version. So inside this season it behaves as you would hope.
For next season, you should not care what the initial MMR is – once you have played 10 games it will have moved pretty close to the correct MMR, and by the time you hit 100 games played it’s gonna be on point.
Starting everyone at 0, or 350, or a random number, or via placement matches, or by using the same “real” or “reward” MMR as the previous season, will have pretty much zero effect on anyone who actually plays PvP after the first few hours.