I think my chief concern is really only the "pitching people against each other" thing, like in a rat race. I feel it's very possible to achieve great things, and motivate people, without the gold stars for doing well. It's not about wanting to encourage mediocrity, but about motivating kids to improve for reasons other than want to win.
I still recommend Alfie Kohn's "
No Contest". (I like all his books, unsurprisingly.
)