In my school, we practice "family" martial arts. It provides for a true team environment and includes all age groups (I think our youngest is 4).

    The benefits are that all students regardless of rank have a chance to help others and learn from each other.

    We have a one hour class 2x per week that is for adults only - where we learn self-defense techniques that are too advanced for children under 14.

    Students are matched up in size when practicing drills and techniques.

    Personally I think that age is more important than rank if it is a must to separate classes. In the real world kids will be in positions where peers are higher "rank" and it is a plus for the life skills that should be implemented at every dojang. Not to mention that the upper rank students will learn more responsibility and teaching skills when put in the position to help their peers who are lower rank!