I'm just a bit confused regarding the stakeholders' desire to make standardized exams pass/fail or less numbers heavy etc. The MCAT was revamped with the AAMC explicitly saying that 500 = pass (i.e. good enough to do well in med school) but what instead happened is schools heavily utilizing that exam to select for top students and ultimately having MCAT matriculant medians in the top percentile. Now with the discussions on making Step exams pass/fail, the selection criteria gets more emphasized on clinical years or even more strongly on school name, which consequently worsens the MCAT score creep.
Now say then, the AAMC decides to make the MCAT pass/fail. That would result in a much stronger emphasis on undergrad name for applying to med school and a worsening SAT score creep. Making the SAT pass/fail would mean placing higher emphasis on high school name/quality/prestige and significantly damages educational prospects for students from low SES backgrounds.
Rather than trying to change how Steps are scored, why not instead focus on standardizing clinical years and make clinical grading a lot more objective and less susceptible to biases? Or maybe from that rant you posted, why not make Step exams like the MCAT, in that they focus a lot more strongly on critical reasoning rather than blindly regurgitating facts from flashcards?
The suggestion on placing a cap on number of residency applications is also an effective strategy. But keep standardized exams scored and just revamp the quality where necessary.