Didn't read every single comment above, so some of this may have been repeated, and undoubtedly many will disagree with the following, but here goes:
Appreciate the sentiment behind the change, but will have unintended consequences, I feel. Will result in further consolidation of medical training, e.g. I feel med students at Ivy League or top 10 or however one defines reputation, just saying, at top programs/institutions will take even more just from their own, and vive-versa regionally/system-wise, med students from one institution will tend to stick there and get preferential treatment from their home program/hospital even more, since otherwise how can you as PD differentiate between different applicants from all over the country?
Will put exponentially more pressure on students to perform well on STEP2CK (no more, if you "bombed" or did worse than you wanted on STEP1, can make up for it by an above-average performance on STEP2), which if you traditionally still take it at your school at the end of third year (that said, lots of schools are moving to an accelerated preclinical curriculum and more clinical time, so this may accelerate a trend of taking STEP2CK earlier, I guess?), then how the hell do you plan for which specialty to apply into? You find out your score by beginning of 4th year, then you scramble for away rotations (pretty much a requirement for specialties like ortho), so that becomes even more of an application s*itshow than it already is.
Along with the fact that most every school is already Pass/Fail preclinical, lots of schools have moved to a no-ranking or loose ranking (buckets of quartiles) criteria, whereby at many institutions, that ranking is not actually determined just solely based on preclinical grades (since, well, there's no more grades), but an amalgamation of "professionalism", interpersonal skills, "peer reviews", etc., which again, how do you objectify and grade those?
And of course, we know third year grades / MSPE's are inherently subjective and vary widely between institutions (some schools, everybody is described as the next Nobel Prize laureate, but on the other end of the spectrum, I definitely have friends at DO schools where the written comments aren't filtered and are so brutally honest as to being cruel/unnecessary mean/personal and not constructive), so those grades really don't mean much either and are hard to impossible to compare school to school. And LOR's are also subjective data, and generally effusive of praise.
So... If you don't have any objective data, then you go back to an old boys system of who do you know, "networking", calling, further consolidation of training...
Not being pessimistic or cynical here, but just genuinely unsure how that can help students and employers down the line, and will just make the physician workforce more homogeneous rather than diverse and reflective of the patient population we serve.
Or, another possibility, if you need to differentiate yourself, then research becomes mega-important, students in more competitive specialities need to do an additional research year, training gets even longer...
And, finally, as a student I would find that entirely EVEN more stressful, since you're going into application season with even less data to figure out what's in and out of reach specialty-wise, which programs to apply to, and murkier/less reliable advising from your school, since entering uncharted territory.
Or, as a result, all schools realizing the above, and wanting to differentiate themselves, return to a graded 4-year system, and more emphasis on SHELF exams and ALL exams throughout the curriculum, and the end result is more stress/more focus on grades/going backwards as well...