I’ve done portfolio grading — in composition classes in college. I think they’re useful, though I don’t do them any more (for a number of reasons, some pedagogical some practical).
You’re primarily talking about pre-secondary and secondary education here, and I agree. I think that we’ve got to find a way that measures knowledge (or skill or whatever we’re trying to measure) in kids that isn’t the same as a “grade.” Grades are fine when they are used for more than just assessment. You’ve got to have something to call what you’re seeking. “Skill level” or “progress” or whatever still amounts to “a grade.”
So the thing I think you’re seeking is a different attitude toward learning, which I totally back. Kids don’t need to be measured against each other. Measured against some goal “We’d like to see X reading comprehension level” or whatever is fine. And the point of education is to get them to that goal.
Of course, though, if they don’t have grades, how will they ever get into college?!? *rolls eyes*
Right now, that’s one of my biggest issues, actually. As a college prof, I see lots of kids who got good/very good grades in hs. Do they have the skills I think they should have walking in the door? NOPE! *sigh* We’re seeing more and more need for remediation in college (which isn’t working) and I want to believe that if we thought about education the way you’re talking about it, remediation would be a lot easier to deal with.