I see a lot of potential in this. And a lot of potential pitfalls, too, but as the pits reveal themselves, they can be countered by instituting new incentives. The potential for cheating, though, I could see being handled by structuring the system so that if anyone can be detected as cheating, it would penalize that student's peers, and that as a student achieves learning rank, it would benefit the student's peers. In this way, the student's learning community would have a stake in its members not only being honest, but also in learning and improving. A community could consist of one class, made up of, say, 30 students. If one or two were having trouble, the entire class would have an incentive to help them along, and their help would be invaluable -- the helper benefits by learning the material even more deeply, and the helpee sees learning as a way to connect with his or her society, as well as a positive experience. Most kids with lower grades tend to view the learning experience as negative; this could change that. Please watch my blog - I'm planning to post on your idea with a link to this piece in the next few days.