Doug,
So, I think that we are all shooting for the same goal. I'll add to Kris's comment to describe a little bit more of the background of this, and ways to accomplish what you are trying to accomplish.
First of all, the reason that we went the way that we did was that, while you could do grading as you describe in the old outcomes system, it had some real limitations, specifically around tying outcomes to quiz questions. There are many times where a quiz question ties tightly to one outcome, and whether or not the student gets that question (or a group of like-mapped questions) correct is a very solid indicator of competence. We have to balance this with the more subjective nature of other types of grading, such as assignments, where a paper could cover more than one outcome, and the grading is more subjective. For this, we are doing tight integration with rubrics (advanced grading). So, in the example that you mentioned, you could create a rubric that was mapped against outcomes and had the scale that you mentioned (1 Not Present; 2 Area of Concern; 3 Progressing; 4 Mastered). Upon grading that activity, you would have the data that you need. This is different from a quiz question, where it is a much more binary condition. We want to make sure to support both paths.
Additionally, the ability to do coverage reporting, as well as "Completion" reporting, where you can see whether or not your students have read or participated in the background materials tied to specific Outcomes should be a huge win for remediation of possible issues.
As to whether or not to display them in the gradebook or not, I think that there are arguments for both, and I'd love to hear more dialog on it. Currently, the Outcomes link in the Settings area takes you to the Gradebook, but you can also get there through the gradebook. We could potentially leave both. I know that Kris and Mark were looking at the technical hooks needed and whether we should leave both.
By the way, I've made a bunch of updates to the spec over the weekend. Take a look. I'm going to make a separate post with notes about the changes and a link to the change log. Thanks for being so active in this thread.
If you'd like to have a more one-on-one discussion with me about some of these issues, let me know.
Phill