Re: significance to testing/belt rank?
I think rank is between the student and teacher. It doesn't necessarily translate anywhere else (other dojo or organizations) and at best represents a process of long, consistent training.
On the one hand, I don't buy that someone wearing a skirt necessarily knows anything worth a damn.
On the other hand, I don't buy that some 20 year student that couldn't be bothered to test beyond 4th Kyu necessarily knows anything, either.
Regardless of whether "competition" formally exists in aikido or not, there's ways of checking your stuff against someone else that has nothing to do with cooperation, but doesn't need to degrade to the level of "fighting", either. I find that it's usually insecure people that need attention or recognition that place undue emphasis on the former or latter to the extent that they have to walk away thinking they're "better".