In order to answer this, you must answer another question first: What is the purpose of a grade? If students receive grades as a quantitative way to report and record the skills that they have, then grades have to be based on performance.
This also begs the question of exactly what skills are being taught. In the elementary grades, classroom and life skills such as working in a group and sharing resources are usually taught along with the academic curriculum. These skills are often summed up in an "Effort" grade, more as a convenience to the teacher than anything else. In the lower grades in particular, I agree with 5, that both kinds of grade - performance and effort- should be assigned. Once students get into high school, I believe performance grading is the way to go. I'm been teaching for 25 years and I'm honest enough to admit that I am not a mind reader. I can estimate what effort a student seems to be giving me, but I don't really know for sure, and at times my assessment in this matter has been quite incorrect.
I think that high school students should be learning to stand on their own two feet. In the real world, nobody cares about your effort, it's what you accomplish that matters. Try filling out your income tax forms wrong and then telling the Internal Revenue Service that you tried your best.