This is a good way of doing it, much better than kata and technique testing, in my opinion. This issue is still, however, that the differences between a white-belt and the early ranks are so trivial that they don't really make a difference in combat or in sparring.
Originally Posted by ozz525
At my bjj school the jungle gym they give you a new belt or a stripe if you preform well in a tournement or show improvement in sparing
This is one reason to stick with training for an extended period of time, so that you can "master" the art and really begin to use it in combat.