What gets me is that we all know how good it feels when the lightbulb above the head goes on. The fake grades rob a kid of that, I think. Achievement is a gift they may not get to appreciate as a child, and that's criminal.
It not only robs them of the lightbulb, it makes them part of a Big Lie that they're not going to understand until they try to get a challenging degree in college, get a good job, etc. We have some of the least accomplished students on the planet, but with the highest self esteem. How many of these kids are going to be righteously p*ssed when they figure out that although they spent the first 18 years of their life being told everything they do is wonderful, the rest of their life isn't going to be nearly so easy and comfortable?