Hi Wallace,
While I don't know if this is really a fair response, I know that the University of Miami (Florida) Institute for the Study of Quality is using a form of Deming's philosophies. While students still get letter grades, the classes are taught with the principle of continuous improvement at the forefront. When a student turns in an assignment, the professor will review the assignment, make suggestions/feedback, and then hand the assignment back (with the current grade) for possible rework. If the student desires a better "grade", he/she can redo the assignment, incorporating the suggestions/feedback the professor provides. This continues until the professor believes that the student has mastered the concept he/she is teaching (There can be upwards of 10 or more iterations of this process). Hence, there is the concept of both continuous improvement and personal mastery continually emphasized throughout the course of instruction. On the other hand, if the student is satisfied with the original letter grade, or any grade throughout the improvement process, he/she can opt to stop and accept that grade.
Hope this gives you a little of what you are looking for.
Cheers!