I've said it before, but I think tests are important. They:
1. Are a way to say 'thank you' to the sempai and sensei who've helped you learn
2. Are a learning experience for and a demonstration to the kohai on what is ahead
3. Help you focus on what you are doing well, and where you can improve
4. I'm a show-off and I like testing
If someone is at a level past what their belt implies, then it is up to them to change it: test. If they are that good, they may get jumped a level, or tested in an accelerated rate. There is no need to just hand them a rank.
On a similar vein, I am disappointed in dojos that pass students on tests because 'they've been around along time, and well, once they are passed a certain amount of time...'