"The process is logical, and works very well in an environment where success or failure can be trivially measured and is hard to game."
Let me stop you right there
"Up or Out" is an HR phillosophy that was pioneered by New York law firm Cravath, Swaine & Moore, and later implimented in environments as diverse as McDonalds and the US military by McKinsey & Bain. It is based on the idea that staff tend to rise to positions at which they are insufficiently competant to be promoted [Peter Principle]; such people suffer are a huge drag on organizational effectiveness, and since it is broadly illegal to demote people back to a role in which they are competant, they must be dismissed.
The process is logical, and works very well in an environment where success or failure can be trivially measured and is hard to game. Doubly so in industries in which experience of failure is of little or no value. I'll leave it to you to assess the quality of match for this phillosophy and the officer corps.