Being practical in the private world if you adopted the same gradings structure I think those that worked hard to gain a higher grade would find more demand for their service and as a result effectively be paid more?
If we talk helicopter instructors - given very many become FI's as part of gaining hours enroute to an entirely different flying career- I'd think any differentiater would be happily adopted.
Besides career on a personal development side I think most pilots (privately if not publicly) are mindful of the experience and standards that come from the military and as a result would enjoy the opportunity to have their flying challenged.
What I think is weak currently is the obsession with flying hours as a quantity with no thought to their quality.