I agree though, that the ultimate idea is to educate. If that can be achieved through a back-and-forth exchange with a group or a graduate assistant, then that's maybe how it should normally be done. Maybe all semester, not just during the 'final'.
Brown's curriculum was created with some similar ideas. No one sees which classes we fail. However, we still have A/B/C (though we got rid of Ds, because if you are getting a D, you shouldn't be getting credit), and the C grade is often deflated, which means taking a class pass/fail is seen by many as "slacking off." I really do think it'd be better to just have everyone take every class pass/fail, with the fail cutoff at a little above where most Cs are given now, but external audiences (read employers, med schools, etc.) really seem to dislike that, so the pass/fail option is way underutilized. At the very least, it would make sense to require all freshman-year classes to be taken pass/fail, because students come into college with such different backgrounds, that they need the first year to ramp up before they can begin to be evaluated on level ground (otherwise, students with less rigorous high school backgrounds can get a 2.5 their first year, and never have a shot at being seen as a "successful" student). As a personal anecdote, I've gotten more out of most the classes I've taken pass/fail than for a grade, because they were either the ones I pushed myself the hardest just to be able to pass, or the ones that I cared the most about the material, rather than how tests work/memorizing material, etc.
As an adult, no one gets my grades. They are for my personal growth and no one else's business. If someone wants to evalute my abilities, they have to do it by sitting down with me and figuring it out themselves, or looking at Github or something.
If I'm responsible for a child's future, and for her/him to have a decent future I have to do certain reasonable things that some backwards educational culture considers "cheating", I'll do it.
(Of course, I wouldn't want to put the child in such a toxic environment in the first place, where her success might put others at some weird disadvantage. There are more enlightened schools.)