Here's a crazy thought, if you just have to use a level system, wouldn't make more sense to have everyone at the highest level to begin with, and then demote them accordingly. Isn't that the way it works in the real world? (sorry, off topic)
I don't think it's off topic. Points and/or levels are part of the behavior modification principles employed by most of these programs. The other part is the rewards and punishments (or "consequences" if you prefer) that go with the points & levels. If you study behavior modification techniques, you will understand why they don't start anyone at the highest level rather than the lowest level.
The thing that really distinguishes what parents and EdCons refer to as a "soft" or "good" program vs. a "bad" one is really just the specifics of the rewards & punishments, not the use of behavior mod techniques on the kids. That is the whole fallacy of the sales pitch behind these programs -- parents are being sold a behavior mod program under the guise of "therapy." I would argue that if one's goal is simply to modify a child's behavior, then the "soft" programs are less effective than the harsher ones like those run by a certain company whose acronym reminds us of a certain stinging insect. But remember that coercing a behavioral change is not the same thing as addressing psychological problems or dealing with their causes. In fact, behavior mod often has the opposite effect, even though outwardly the person's behavior is "better."
To any parent that is considering a BM program for their child, I highly recommend first learning about this subject and it's founder, a controversial Harvard grad named B.F. Skinner. After he finished his experiments with modifying animal behavior by using rewards like food and punishments like electric shocks, he began testing with human subjects. The first human subject was his own daughter.
In the decades since Skinner, his techniques have been improved upon and adapted for use by oppressive governments (especially N. Korea and China), cult leaders, POW commanders and more recently the "Troubled Teen" industry. In colloquial terms, BM is often called "brainwashing." In the hands of a skilled practitioner who has absolute control over another human being, it can be used to make the subject say or do absolutely anything they are physically capable of doing, including things that completely violate the subject's own morals.
When BM techniques are used on another person for a long period of time, they can indeed produce long-lasting behavioral change, even after the subject is removed from the rewards/punishments BM system. This occurs because of what psychologists call cognitive dissonance -- an inherent stress each of us feels when our behavior is inconsistent with our attitudes & beliefs. If you can coerce the behavior change and repetitively reinforce it over a long period of time, eventually the attitudes & beliefs will follow. If for example, rewards & punishments are used to coerce me into eating a food I dislike -- on a regular basis for a long period of time -- my subconcious mind recognizes that I eat this stuff all the time (that is my behavior), therefore it must be true that I enjoy it (attitudes & beliefs).
If you want your child to be broken down and built back up into a different person, BM can do that. If your child has real psychological problems (depression, etc.), BM will not change that -- you just end up with a different person who still has those underlying problems.
To a parent who has read all this and says "yes, that's what I want -- a different child" then I would seriously question your ethics.