It is great when gyms can look at an individual situation and make the best call for the kid.
Yes, there are ideal skills to have at a certain level but they don't always come when you want them to, and it is up to the coaches to come up with a good plan that will keep the kid happy, building confidence, progressing, and competing at the appropriate level. We have a L7 girl who competes a unique beam series - a CW / Roundoff, and then she adds in a BT dismount off the beam after her roundoff - so she does this series as her final element and it is really quite cool.
And yes, a kid can compete L7 without a giant and be successful in doing so - and importantly there can be good reasons for doing so. I know all too well what it is like to have a kid who can get a 9.5+ on floor, beam and vault but is struggling with a giant.....so for now a substitute routine is in place for bars, with the goal of getting that giant. My DD is happy and knows it will take time to get there on bars - but she can compete quite successfully on her other 3 events (and score decently on bars) and still be an AA contender which is nice. Thank goodness for a flexible gym in this case.
Where there is a will - really a will to be creative with a long term outlook and plan, there is a way!!