It's an unavoidable topic to pop up more often than not in these forums. However this article is quite enlightened.
Personally I'm a bit fed up with people choosing a 5th dan dojo of one style over mine with a different approach to aikido ONLY due to me being a 2nd dan. It's okay to go somewhere if that shoe fits better - but at least give it a try instead of just choosing based on a number value.
An interesting problem that is omitted is how some types of budo - eg Ninjutsu - use the dan-levels in a substantially different way than what I know from Karate and Aikido. They are free to do so - but it does create some confusion when an 11th dan instructor is mentioned..
My approach is, that It's the system we have right now - so let's just get the best out of it and get back to practice.