I firmly believe in test and ranking.
I think that without it, it would be pretty hard to monitor the students progress.
In our dojo all the kyu levels are entitled to colored belts.
The waza that is assigned to each kyu is a building process. They need to practice these over and over again until it becomes habit.
Without this basic understanding of technique, the essence is impossible to grasp. I think the only way to verify a student would be to submit them to testing. Sometimes we have students that can perform beautiful technique in class but when there is a little pressure on them such as a test, the waza becomes flawed. This means that the technique does not lie in their sub conscious yet and are therefore not ready for the next level of training. Our dojo is very strict this way and I think if I trained any other way in the past then I wouldnt have the understanding of technique that I do today. But maybe Im wrong in my perspective. It seems to work fine for us and it gives everyone strong motivation and a good sense of discipline. Aikido tests are not just about technique. If there is no motivation or discipline then the technique suffers and it is immediately obvious during a test.