Thank you for linking to that thread. It was a very interesting read and has made me think.
Firstly the subject of music exams. My main opposition to them is that they can so easily take over as the primary motivation for learning an instrument. I've been reading quite a bit recently about intrinsic versus extrinsic motivation and can't help thinking that practising pieces, scales and aural skills for the sake of getting a distinction, or whatever, is very much an extrinsic goal.
As a 33 yo professional musician, I still struggle with the idea that my job on stage is to entertain and communicate and that the audience is not there to find fault with my playing. Even the (local) newspaper critics see their function as being to make people feel that they missed something by not attending the concert being reviewed. Of course this mindset is partly a result of years spent at music college, where performance classes are seen as an opportunity to criticise ones fellow students, and lots of auditions, where unsuccessful applicants have the opportunity afterwards to be told their failings based on the five minutes of playing in a state of near-panic that the panel have just listened to. But it started earlier in a system where progress is measured by passing exams. 
The teachers described on the other thread who focus on termly concerts sound great. I'd like to see much more emphasis on encouraging kids to become confident performers and all-round musicians (that is, after all, the point of sight-reading and aural skills).
Secondly (although this is less relevant to this thread) I think approaching aural training from a jam/improvisation base is clearly better than the way I, at least, learned. (This has been the big revelation of the morning for me
.) It is sooo much easier to internalise the sound and feel of a 12-bar blues harmonic progression and then learn some labels for the chord relationships, than to be taught the terms through theory or with constant reference to printed music.
Thirdly, like DeWe, I want to comment on your point no. 2. I actually think it is a very good habit and I remember being praised for "keeping going rhythmically" when I temporarily found my fingers on the wrong keys during a piano exam and had to get myself back on track. In fact, I can't remember a single teacher ever telling me that it was better to stop and replay, except as a last resort.