I also really like the idea of getting a belt in martial arts. Passing grades has become so expected and boring that there really isn't a differentiation there or a marker that the student has actually achieved something. If you were creating different paths for students to take, how would you organize the content/courses? Would you stay with the curriculum process that is taught in K-12 schools and just allow students to go at their own pace? or would you change it? If you'd change it, what would you use to determine the curriculum path?
Your point about integrating education with real things is perfect. Something we've been thinking about is creating a type of student corp or tutor corp that would match up smart students with struggling students. Peer 2 Peer learning is going to be huge b/c it is really the only thing that scales. (As David Wiley has said, we have limited "teacher bandwidth" so we need to get creative, particularly when you look at things in the context of the entire world. There is just simply not enough educators out there and we are not exactly efficient at turning them out.) So, the question becomes: How do you create an ethos in which students want to help other students? Do you think an open platform that allows this would be sufficient? or, do you think you'd need to be deliberate about creating this culture? If the latter, then how would you go about conscientiously creating this type of atmosphere? One thought is to incentivise it so that students and teachers are rewarded for reaching out. This could come in the form of Karma points, recommendations, a moving up (to stay with your metaphor: yellow belt--> green belt etc.). What else would you recommend?