We have been piloting this in the English department for two years at our high school and the kids and parents love it. I just attended a presentation by Dr. Marzano and my decision to stay with standards based was further solidified. We have a great technical document and powerpoint that we have given to our parents and students. I will post them if anyone is interested. But I do believe that this is the way to go in education. It is not inflated grades, but a snapshot of how a student is progressing towards mastery of a standard. It has changed our conversations about students and education and to be honest, you could not pay me to go back.
Standards based grading document
Standards Based Grading PPT