Re: significance to testing/belt rank?
I read some where that the the All Japan Kendo Federation had some discussion on eliminating the 9th Dan because the failure rate at 7ty-8th level. That may not be the best solution, but it does illustrate the problem.
I think for the most part people just can not train the way they used to.
Not speaking only for Aikido, but other arts I trained in: I always felt like I got good training but always knew that I did not get the same training that my teachers or even some of my seniors got.
Now my own students are saying they would like to train the way I did. But they can't - unless they want to quit thier jobs and get divorced.
Unfortunately, we have to use "belt ranks". But I'm looking more at a "review" as opposed to a "test". When somone is ready for promotion, I'll run them through the requirements just to make sure we got everything covered. If not, or they screw up, then we'll just do it again some day. So, although it is possible to "fail", I won't let them do it unless I'm pretty well convinced they are going to pass. This is the way my Karate teacher did it. In 6 years I only saw 2 people "fail".