I think this discussion is a direct product of the flaws in a (USAG) system that attempts to offer a competitive experience to the majority of kids that walk through the door, stick around for a few years, and then start competing at L3 or L4. The problem is that the system makes no distiction or provision for programs that are more recreational, and programs that wish to make L10 a possibility for any child who can summon up the requisite collective ability, discipline, determination, and sacrifice.
There are no right answers when it comes to figuring out how to move a child through levels, as each program will look at the level system differently. Some will use to provide an experience to just about every child possible, but lump all kids into a participation based program that care little about helping kids become the gymnast they'd like to be. These children are at a distinct advantage when they go out to compete because they are subjected to the entire gymnastics population..... including those within that population that treat each child as a potential level 10.
I think most of the coaches that are driven to get kids past L8 would love to train and compete their kids up to a certain compulsory level, lets say L5, and then spend the next year on nothing but the skills best suited to long term optional development. Why have them compete, you ask, if the coach only wants to train for a smooth transition into the optional program. The answer is the kids and their parents, for the most part, would throw a fit if a competitive season were skipped in favor of the drudgery, that's right, of training, training, and more training.
I get the whole "it's not fair" sentiment, but the USAG program isn't based on fairness, it's based on inclusion, participation, and competition. There really is nobody you can fairly place blame on when you consider the vastly diverse and numerous perspectives. Possibly there will come a day that splits the program into two camps..... one that, in a sense, excludes "optional or die" programs, and another that bears the warning "enter at your own risk."