Ck knows his pool settings best, but I can tell you that whatever you explained above is just how any mining pool would function, the pool doesn't know what hashrate your miner hashes it, it has no idea how many shares above certain difficulty you can submit per x time unit, what the pool knows and want is a steady flow of shares, too many shares accepted is bad for the pool and the miner (bandwidth and resources), too little shares is also bad (at least for the miner status), although, logically, to a pool like CKsolo it could do just fine with setting it's difficulty to the network's difficulty because no other share matters to the pool, but it matters to you as a miner, you want to see if your miner is online and hashing.

So once you understand the above, it becomes easier to understand that the pool starts with 10k diff, and then see how many shares you are going to submit for example in the first 10 seconds, let's say the pool wants to keep the rate at 1 share / second, but you submitted 2 shares, they will not set a new difficulty for you at 20k, on the other hand, if you submit only 1 share in 20 seconds, they would set the difficulty to 5k to get you to 1 share/ 10 seconds.

When mining with a small miner like the one you have, it's normal to get many rejected shares at first because the difficulty is just too high for it, it will come down eventually and you will start getting fewer rejected shares, give this whole process a few minutes or even an hour or so, things will even out and your hashrate / shares status will look normal.