I agree that grades are in dire need of examining. I also agree that grades need to reflect understanding/knowledge and ability. For a great deal of time there has been an ongoing discussion of results vs effort. But the two should somehow converge to one in my opinion. I think that every teacher should ponder the following:
1. Effort vs results
2. Grading on a curve (big no, no)
3. Rigor isn't equal to work load (i.e. the number of workbook pages to be completed)
4. Grades should not be a consequence of inappropriate behavior (implying that is it then true to say they shouldn't be a consequence of appropriate behavior?)

The pendulum is definitely swinging. The most recent article I am reading (given to me by Karl of course) has a great deal of controversial ideas. It states that we need to throw out frases such as, "study this because it will be on the test". We need to steer students back to the value of learning and understanding new material to lead to a better understanding of the world. We need to tell them why the knowledge is important beyond the classroom. The articles suggests throwing out grades entirely to promote student learning. That everything that grades reflect (especially in the past) have nothing to do with learning (I do have questions about this).

I agree that the first step of this process (of grades reflecting true understanding), is eliminating the grading curve and ranking process. Shouldn't every student have the opportunity to learn from their failures to reach true understanding of a concept/topic? If we truly believe that learning is the center of education, we need to reflect that in our assesments (re-assessments). To me this means that a student should be able to re-write, re-read, or re-take to demonstrate aquired understanding/knowledge of the content and raise their grade/understanding of the material.
I do live in a real world with 30+ students, time restraints, and the truth that some students embody laziness; however, I would like to think my job is to teach students to problem solve, create, question and learn, not just give them a piece of the alphabet.