It's a little easier to understand the all white till black system, if you remember that in Japan, shodan is often reached in 2-3 years. Often groups in the same organization outside of Japan take twice as long to promote people to shodan.
hmmm... I wonder if Jun has already done a poll on this.
If it takes two years of training to reach 3rd kyu outside of Japan, I don't see a problem with giving someone a blue or brown belt when if they had trained the same amount in Japan they would be wearing black.
I have seen all kinds of students. To some is doesn't matter, to some a little color is good encouragement, to some it feeds the ego, to some it bothers them because they feel not worthy.
I wonder that some times those that really love the all-white kyu rank system just really like it because they don't feel confident and feel threatened by wearing something that would indicate rank even after years of training. Those often seem to have huge psyche problems at shodan because of the change of clothes.