I think Kage should still be a leadership role, and implementing challenging for Kage would help keep it fresh. More often than not people won't challenge for Kage unless they can be effective and strong, but I think it serves more purpose, especially as player base grows and villages need people obligated to teach new players the ropes and how to handle PvP events and missioning.
I'm fine with people challenging for Kage position, as long as its done for the right reason and there is some criteria to keep people from challenging just because they don't like the person who is Kage, or because they're stronger than them as a player.
I'm also fine with the ranked system being suggested, as well as more difficult Chuunin exams. I'm just worried that if Kage becomes a position based solely on personal strength then people will be left out in the cold more often than not, its really easy to get overlooked as a new player trying to get advice, especially when you aren't obligated to help to lend creed to your rank.