I just wanted to share how it's done where I'm at. Kyu ranks are handled accordingly and pretty much like everywhere else. In fact, we are probably Aikikai standard (although I know the dan time requirements are longer than Aikikai standard) in our requirements.
However at yudansha level my instructor has chosen to walk a different path. All yudansha exams are demos. You get 5 minutes +/- to do your thing (literally). Music is perfectly acceptable during the test. I believe we will one day see some really bizarre stuff.
On our last batch, the board consisted of 2 sixth dans, 2 fifth dans and a fourth dan and while all were Aikikai, some were different branches of the Aikikai (we also had a Capoeira demo at the end of the tests).
My own take is that with this methodology I saw unique individuals showing a bit of who and what they are. What I more typically see in tests is individuals showing what their instructors or shihan are. For me personally, that is a huge difference.
An interesting take on upper level exams. I think one could argue a good case for this type of exam being appropriate at senior levels (although I would wonder about the strict time limit).
I notice, however, that you've only mentioned 4th dan and above. Is the format the same for shodan? For nidan?
IMHO, the type of test you describe might be better suited for the senior-level folks you've mentioned. However, at shodan/nidan/sandan, it seems to me that maybe one should be still learning the basics, rather than doing their own thing.
Just another point of view -- I'm not disparaging the way anyone runs their dojo.
I simply want to keep the discussion going...