Yeah, my school was doing that, "pass" (or, "expected" as they called it there) was an excellent grade. The problem was that the range of performance you had to put in to get an expected was way too wide. If you barely showed up, were rude to people, passed all your tests but barely, handed in your projects late and they were sloppy, and showed no enthusiasm on the wards you got an expected. In order to get above that it was mostly political.
They say it's not political, but it totally is. Anyone who does pediatrics and does a few things: 1) Smiles at all the kids; 2) Brings in articles (doesn't matter if you read them or understand anything); 3) asks for more responsibility in situations when you know they are not going to give you any more; and 4) bring a "milestone" chart with you everywhere; gets a better grade. Knowledge? What's that? Did you bring in an article? Do you want to look in that brat's ear? My comment on my pediatrics grade: "Would have been nice if he showed more interest in pediatrics." Well, ****sticks, it would have been nice if you all showed more interest in pathology other than "is the biopsy back yet? Is the biopsy back yet?"
And yes, I feel your pain in not having the test grades count for anything. The surgery clerkship it did count for about 25%, which is reasonable. In the others it counted for 10%, which when you have a 3 tier grading system is basically crap. And plus, they "average" things out. On family, for example, my grade on the clinical part was "expected." Grade on the few papers we had to pass in: "Above expected." Grade on the final exam: "Above expected." Final grade: Expected. Whatever happened to rounding up? Oh wait, I get it. They only round up for people who say, "I want to go into" field x.
I tried not to have in my evaluations of my clerkships until after I received my grade, so I could properly make some choice comments. Like on the pediatrics eval I was able to write, "My problem with this clerkship was that intelligence and knowledge were deemphasized in favor of other characteristics."