The system I described is more or less what our association (TASK - Traditional Association of Shotokan Karate) uses..
As for Dan grades they are very hard to achieve and for me 3rd Dan is about right... Dan grades above 5th tend to be awarded for special reasons - often through significant contribution to the art or association so on here say, certifiably recording all AA boxes in the UK would be recognised with the award of a high Dan grade

Our Shihan (Association Master) is an 8th Dan, is in his mid -70s and has been practising karate all his life and has spent a considerable time in Japan training and learning the art.
He has his own Wikipedia entry... He's a great bloke and very interesting to speak to... He is our grading examiner and critically appraises our performance of kata...