I agree with Adele, I participate because both the RP and the game itself are fun, with peer recognition of skill and/or participation being merely good color. Myself, I don’t need to get promoted to enjoy the experience of the the rich storyline and vibrant personalities. That said, because promotions are a relatively rare event (other than from acting ensign to full ensign), they do not add enough color to make any difference in the experience. Having at least one other more-frequent but still meaningful marker of accomplishment is a good way to keep the playing environment fresh (and a small incentive to improve).
Looking back through the thread, I don’t see that folks fundamentally dispute the general idea of adding something somehow, but we may be losing sight of that goal by getting caught up in picking the nature of the marker — levels, medals, etc. Heck, we can implement more than one type of marker, for example: give a ribbon for attaining a level of general skill and experience (participating in enough sims and missions at a console, with at least one regular CO attesting competence), a medal for acts of initiative and derring-do (nominations by anyone), and a formal commendation for RP participation (by CO or higher). Promotions would still be handled as van Leigh described and be subject to the existing, stricter standards, but every shift or two somebody may get one of the other types.
One additional thought. van Leigh raised a very good point about the lack of peer nominations for recognition sapping momentum. Perhaps nominating should be a specific charge to lieutenants (when not serving as CO) and lieutenants-junior, even if just for a while to get the ball well and truly rolling. They have enough experience to notice a colleague’s meritorious act during a battle and enough perspective to appreciate how above-expectation it really is.