If they give preference to past winners, rather than deserving actors who have not yet won (or even been nominated), that is absolutely backwards. I hope that's not how it works though I'm sure it is.
The only one in that group of nominees I would for sure eliminate to have nominated LuPone is Holland Taylor for the same series -- without a moments hesitation, both because she had a better and bigger role and as an actor she was massively more impactful on the story and enjoyment of watching the show, AND because Taylor already has an Emmy (and 7 other nominations).
And being better known should not matter AT ALL. If they watched the show then they should be basing it off the work and the role. And I get why Parson's role and casting and performance make him Emmy favored, and rightfully so... but why was McDermott?