Rangers' Europa League campaign was brought to a humiliating halt in the first qualifying round with a 2-1 aggregate defeat at the hands of Progres on Tuesday.
And former Rangers midfielder Barton, who left Ibrox in acrimonious fashion last season, is not convinced the side from Luxembourg could cut it in the fifth-tier of English football, now known as the National League.
"You can't get away from it, it is a terrible result," Barton said to talkSPORT.
"It is arguably the worst result in British footballing history in Europe because you shouldn't get beat to a team from Luxembourg.
"You can understand the frustration of the Rangers fans. They have been to the depths of Scottish football and they are on the way back up.
"There is a wider issue in the context of Scottish teams in Europe. Barring Celtic they haven't done well in Europe for a long time and that affects the co-efficient and Scottish teams have to play these preliminary games.
"They should be overcoming teams who are fourth in Luxembourg and from Gibraltar with ease because you have got to look at the comparative level of those sides. In the English pyramid where would they be? Would they even be in the Conference? I don't know if they would.
"You are probably looking at the equivalent of the Unibond league, whatever that is now. From that respect, a massive football club in Rangers, it is sad to see."
Barton feels Rangers' loss is worse than Celtic's stunning first-leg defeat to Lincoln Red Imps from Gibraltar in last season's Champions League qualifiers, which Brendan Rodgers' men managed to overturn and ultimately reach the group stage.
"I think there is no doubt about it," said Barton. "It is a two-legged tie, so even if Rangers had lost last night but managed to get through in the tie, while it would've shown there is a lot of work to be done, the main aim is still winning in any manner, getting through to the next round, that's cup football.
"Rangers haven't done that, Celtic did against Lincoln Red Imps so that negates the terrible result that it is. Everyone does [find it inconceivable].
"I love Rangers. I'm gutted when I see that result. I know how many people pay hard-earned money to travel and passionately support that football club. That is the most disappointing thing when they are back in Europe for the first time."