Im not going to go into deep specifics here, Idw to create teh exact system, unless of course im asked to then id be more then happy. But with the ranking up system. I think it shoudl goa bit like a job application.
More or less have them do a certain number of missions of different ranks before they can be even eligible to apply. (this would be like the education and past work expirience part of a job app.)
Nominations, this owuld be like the refferences, have at least two other rpers, of the same letter rank (e-S-) but regaurdless of faction they are a part of. E.G. a kumokurge nin can nominate a knonoha nin for rank up if they are of the appropriate level themselves.
Finally have a screening process. You could have 3-5 people for like a board OOC wise. They would go through past topics and check their rp quality and other things. Have they gone the extra mile? etc. Have they displayed the next rank capabilites in prevoius fights? things of that nature that show they are ready and able. This would need to be at least decently strict, so not everyone who applys and hast the minimum requirements would be guaranteed to rank up because having people who arent ready to rp at that level with their rping ability achieving higher levels, is a very bad thing and makes the site unbalanced and all around can be disasterous.
This is the basics of an idea. Do with it what you will.