Although I cannot claim to have done a lot of research on this sugya, I am pretty sure that maalin bakodesh is not the exclusive reason for going from 1 through 8. Maalin bakodesh says that once you place something at a certain level of holiness, you cannot downgrade it. Lighting 1 candle every night would suffice to fulfill this requirement.
It seems that, even according to the 2nd opinion, all agree that there is a mitzva to show that there is a progression of 8 nights. Bais Shamai and Bais Hillel are arguing about how to show that progression. Bais Shamai held that it was more accurate to do a downward progression (perhaps showing how the oil burned- see Maharsha). Bais Hillel said that's a great svara, but unfortunately we have a rule of maalin bakodesh v'ain moridin. Bais Shamai argued back that we have precedent from parei hechag.
The upshot is that all hold of the daily progression, the only question is- which way.