Also, at that age, your ability to learn climbs very high just as function of age.
As long as the middle gets sorted into the Realschule, there's no problem ;-) But more seriously, according to wikipedia[0] IQ is relatively stable beginning at an age of approx. 11 years, so if we compensate for the measurement error with a permeable system I only see two problems: As you mentioned, at this age the brain devolops so rapidly that being the oldest in the class gives students a measurable advantage, but that is an issue for any school system, and as I said in a neighboring comment, overly ambitions parents are meddling too much, but that is a relatively recent phenomenon and a problem unto itself.
More to the point: you can't in one breath say "I know the difficulties surrounding IQ" and in the next say "any source I cite about IQ must represent settled science". One or the other of those statements must not be true.
[0] Deary, I. J., Whalley, L. J., Lemmon, H., Crawford, J. R., & Starr, J. M. (2000). The stability of individual differences in mental ability from childhood to old age: Follow-up of the 1932 Scottish mental survey. Intelligence, 28, 49 -55
There is a lot more then IQ that goes into grades. All of it happens before 10.