She's only been going a couple weeks, so take this with a grain of salt.
She's in a twice a week 7 and under homeschool Taekwondo class that's kept fun and non-competetive. So far there's no kids over 5. A friend comes along who is much more competetive and coordinated than DD1 and she is a motivating factor all by herself.
It is definitely physically challenging, but the kids are not pushed to do what they cannot, KWIM? Obviously the older kids are capable of more, and that's not a big deal. I actually prefer the mixed age group because DD1 gets the message that it's OK if someone else can do something you can't, and it's OK to try and fail... jsut like the kid next to you.
We're working more on the active listening than the respect aspect. I don't expect her to say "yes, Mother" all the time, but I explain to DD that when she acknowledges people, it shows she's listening. I do talk actively about respect wrt to bowing (you're entering their house and must obey their rules).
We haven't been going long enough to discover unexpected benefits.
The only thing I'm hesitant about it the "good citizen" reporting. In our family, we don't keep tallies. However, I've decided to let it be DD's book, and DD's record... I'll just help her fill it out. She was also told when her belt was presented that it could be taken away for inappropriate behavior (we're talking something major here... not at a whim), but those are the rules.