we do actually split our dojo in the manner you describe - not so much on the techniques as the way they're applied (speed, effect on uke, distance between uke & nage at start etc.).
I suspected someone would say the way they train leads to a division based on ability or syllabus. Which leads to this question: if someone is capable of working with a higher group (say a 4th kyu that can train with the dan ranks) or someone is capable of performing an "advanced" throw consistently, are they promoted? If not, why not? What does rank measure?
To me, rankings based on tourney bouts can be just as arbitrary, look at boxing for this taken to the extreme.
I disagree. While there is a good deal of corruption in boxing, I think that the rankings are fairly accurate. I don't mean to suggest that a boxer ranked # 5 is "better" than a boxer ranked # 15. I do mean to suggest that boxers are judged on their performance against skilled, athletic, uncooperative opponents. Additionally, a victory over a talented opponent holds much more weight than a victory over a mediocre one. I would argue this is much less subjective than a demonstration.
But as I said at the start, I'm clearly a minority at best (heretic is probably more accurate). And, as it's been pointed out in other threads, I'm evil as well.....