Grading climbs appears to be a fundamentally contentious issue. However it doesn't have to be, science already has an elegant solution to this problem. Measurement Theory is a branch of science that has developed specific strategies to assign labels to real-world attributes. An introduction can be found here.
"The map is not the territory" is the most fundamental assumption. Measurements are not the same as the attribute being measured; the grade (measurement) of a climb is not the same as the difficulty (attribute) of a climb.
Given that assumption, there are 2 steps to establish a functional grading system:
1. Use comparative scaling to rank-order the difficulty of climbs.
2. Construct and assign scale values (i.e., grades) based on those rank-orderings.
The first step requires a fundamental shift in the way climbers record difficulty. Instead of arbitrarily assigning a grade to a climb, a climber would compare the difficulty of the current climb to the difficulty of other climbs the climber has completed. For example, I feel "Dragon Fly" is more difficult than "The Madien" but less difficult than "Baby Face." More subtle distinctions can be made - "Dragon Fly" feels more difficult than "Lobsterclaw" but less difficult than "Hobbit in a Bender." A climb could also be rated as the most relatively difficult. An internet database (e.g., Mountain Project, Rockclimbing.com, 8a.nu, 27 crags ...) would be the logical place to aggregate these comparisons.
The second step uses these comparative rankings to construct scale values and assign value (i.e, grades) to the climbs. This is a technical but straight-forward process, it could be handled by anyone who has taken a basic Measurement Theory course. I'll leave the in-depth discussion of that process to a future post.
The current debate on difficulty and grades is pointless until a better connection to the ground truth is established. Above are straightfoward steps in that direction.