Well, I'm pretty horrified that your ds was told he can't draw stick figures - I just can't imagine how a teacher can expect to assign an art project and then dictate to a student that the way they draw isn't acceptable. I think it's one thing to dictate what *medium* to use on an art project, or if the purpose is to study a particular style of art to ask the student to create per that style.. but quite another thing altogether to imply that the way many kids draw figures isn't up to par. Ugh!
I also loved your ds' drawing!
Re grades, I think it's impossible to say what works best because kids' personalities are all so different! I have three different kids at three different schools with three very different grading philosophies - but at each school, effort is integral to "grading" (I put "grading" into quotes because my 4th graders' school doesn't have grades, they do self-evaluations). DD's school also is heavily into self-expression, so in her school, your ds would most likely be recognized and appreciated for his stick figures

All three of my kids started out in the no-grades school and my EG and HG+ kid have moved on - lack of a grading system wasn't why we moved them, but they both perform better when they have a grading system as a carrot. They really respond and self-motivate themselves based on wanting to get As and also liking having the actual results of their work "rewarded" in a grade. My ds school in particular weights effort and participation right alongside with actual results and I think it works a-ok. OTOH, I can't imagine that any of the staff at his school would ever tell a child not to draw using stick figures or however they preferred to draw. His teachers are really good about looking beyond individual students' artistic etc abilities and sensibilities and staying focused on the true goals of projects. They are also very focused on building up their students' self-esteem... which doesn't seem to be a strong point for your ds' teacher.... grrrrrrrr......
polarbear