my point was that you aren't expected to take a test twice a year. It is just that the option is available. For example, I waited more than 4 years between testing for 1kyu and shodan. I didn't attempt it and fail it 8 times, I simply waited until I was ready. For me, that took a while due to a number of factors including health and free time etc. At school though, it is expected that you test at regular intervals.
I understand what you mean by being expected to test in a "normal" school environment vs in a dojo. My dojo is small and I am able to work with students and know when they will be ready, how much struggle they will encounter on a given test and so on. I choose to put them in a situation where their limits can be pushed. Failing isn't the worst thing that can happen to a student. If the student understands this there really shouldn't be an issue. I agree there will be some degree of embarassment but if we can't overcome that, get back on the horse so to speak, then I'm not sure that we are really improving the "self" we should be in the course of our training.