I went to The Evergreen State College, which is the only public gradeless school I know of. Instead of grades, everyone writes narrative evaluations of themselves and their cohorts. Nearly everyone takes one fulltime multi-disciplinary course at a time.

What often ends up happening is that professors will attempt to be rigorous by tying awarded credit in a section of the class with the % of the work you turned in -- but then if they take credit, they excise the portion of the evaluation that would have described your failings.