Upon some reflection, I actually sort of like how the year 7-10 assessment has changed so that pretty much everyone gets Cs unless they are very far ahead or are quite far behind because it actually lessens the role of grades. This is because, realistically, most people would be expecting to get a C - even very smart people are unlikely to be 6 months ahead in all their classes.
I think that grades are somewhat useful. I had a Marxist lecturer who maintained that all grades did was adjust the expectations of students as to what they could expect in the future while reinforcing existing social hierarchies and while I think he probably has a point, they are very good at tracking progress and legitimising the work a student does. (i.e. assignments aren't just hoop jumping, there is an outcome and a benefit if you do it well).
However, to some extent, grades do get in the way. For instance, last year I had an assignment where we either had to do a traditional essay or we could do a more experimental 'visual project', which sounded more creative and fun. I did end up doing the visual project but in order to compensate for the fact that it wasn't what I was used to, I ended up doing roughly double the amount of work that I would have done if it were just an essay. I worried that I wasn't doing it correctly. Turns out, I was rewarded for going out on a limb with the highest mark I've ever gotten in uni but from the outset, the thought of being creative and different and exploring a topic more holistically could have easily prevented me from trying this at all. Additionally, I have been guilty of choosing subjects on the basis that I would get a good mark out of them rather than purely because I was interested in the course. I think that grades are very bad for promoting intellectual curiosity.
Meanwhile, I think 'learning how to learn' on one's own is a very important skill because it gives people a great deal of efficacy. It means that in your life, if you ever want to learn something down the track, you know that you have the ability to do so. This is important in a job, but it's also generally important in promoting life-long learning. And people who learn for their entire lives are interesting and less likely to suffer from things like dementia and generally happier. I think that one of the aims of year 7-10 is not just to prepare for VCE, but to cultivate this curiosity in people. In the classroom, I would like to see more independent and group work, less structure and the opportunity to deeply explore topics of interest. I was lucky enough to have this in year 8 and 9 for 2 periods a week, but very few students get this. Of course, it's also important to teach the fundamentals and have formal lessons (particularly for English and Maths), but there is room for some independence which I think would be beneficial for all students, because everyone would get the opportunity to work at their own level - the smart don't have to dumb down and the students that struggle don't fall behind. While it would also be important for teachers to look at what the students are doing independently, they don't necessarily even have to grade the projects because students wouldn't require that kind of encouragement if they're already interested in learning.