On the issue of belts as someone who's been teaching the little ones for a while.
For the little kids the belts can be kind of important to them. We never emphasize belts or rank with the kids, but... We do let them know that if they want to test we want to see responsibility, good behavior, etc. in class. And yes, it can be a motivating factor.
What I've found is that as the kids mature and get into the advanced program the concern about belts isn't that big a deal. They're already kind of at the "top" of their peer group at this point. And I'm more worried about building on their skills. Usually these kids have already been through a handful of tests and aren't as intimidated by them any longer. They've also been around long enough not to be so concerned with the belt itself. They've also learned lesson in humility many times over because as they get better I push harder as their instructor. They begin to realize the differences of size, ability, age and strength not to mention the skill that comes from lots of experience. So the focus is on doing things they want to learn at this point and they're usually not in any major rush about the belts.
Frankly I think focus on belts is an issue where people make them an issue. The really long term adults and really long term kids for that matter usually learn that the belt isn't that important.
Personally I think way too much time is wasted discussing "belt" issues. I've seen little kids get way too enamored with them. They aren't an issue -- they rarely last anyway. And I've seen long term folk who seem more concerned with the fact that they've been practicing for decades and don't want to get passed up by the up and comers who are still improving. That's their problem, no one else's.
Or as I'm often heard saying... Damatte keikoshiro. That's the attitude that's taken into the advanced kids class, just posed with a more positive spin...
If the program and instructors don't dwell on belt and rank, neither will the students generally. Those who want that kind of recognition can go to any strip mall and learn at a McDojo, get belts, patches, and all the other little do-dads that mean absolutely nothing.