That actually makes a lot more sense than the somewhat tedious way I've taken. (Wait, this is totally irrelevant, but hi, I'm from Rockville, I see you're from Bethesda. Also, I'm graduating tomorrow! So yay class of 2012!)
The benefit: You don't die of boredom repeating "she swims amongst the turtles" 50 times before you get to something that's new and challenging. I always try to test out before doing anything else. If I can pass, then clearly, I'm ready for the next lesson!
I tested out of the early lessons since I do have some Spanish in my background and most of it was things I remember. Now that I am hitting things I don't remember from 20 years ago, I quit testing out! LOL