I'm playing with an idea of how to represent in TSOY a group or swarm of creatures acting coopoeratively against a single target (e.g. swarm of hornets, pack of rats, bunch of kobolds) without rolling dice for each of them.

My idea is to decide that each group of x number increases specific skills.

For example, for every 10 rats in a pack, the pack's Scrapping skill is increased by 1 (to a maximum of Master).

When the pack takes physical (or demoralizing) damage, it actually represents members of the pack being killed or driven off.  This in turn impacts the artifically boosted skill.  In addition to penalty dice from a bruised result, it represents 5 rats being killed.  So that after 2 bruised results, the Scrapping skill is reduced by 1.

Looking over this, it seems a little arcane but could be an interesting idea.  Does anyone have any suggestions on how to improve this or alternatives about managing massed opponents without rolling dice for each of them?

This sounds reasonable in principle. I see two issues:

1) Your setup is linear - if you double the size of the swarm, you double the swarm's ability scores. I think it is more appropriate to use an exponential scale instead: 1 rat has Scrapping 0, 10 rats have Scrapping 1, 100 rats have Scrapping 2, and 1000 rats have Scrapping 3 (or something like that).

2) Once you've created a swarm, stick with it. The effects of having some of the swarm die or run away is included in the penalties for harm. You don't have to (and shouldn't) change the swarm's abilities in the middle of the conflict.