Gary T - I think that 'non-triers' is pretty unfair, below average I would accept no problem, but it doesn't mean I don't try.
I think scoring students for effort and participation has to be the way to go, in fact most running races are like this with a medal/good bag for all participants, and the old 'it's not the winning but the taking part that counts'.
I got a D in sport at school and remember my mother berating the teacher that someone who could swim a couple of miles and had every swimming badge going, and who ran 3 lunch times a week helping training with the Junior Running club, did gym and sailing etc. should be given a D just because I wasn't much good at Netball or Hockey. (Personally I knew I was pretty rubbish at the type of sports we were graded on so I wasn't too bothered by it)
(However is that like saying that just because I was reasonably good at poetry, I should have been given an A in English even though I was crap at Drama?)
Commitment and application mean more than pure talent, David Beckham wouldn't be where he is today without absolute dedication to his sport. Paula Radcliffe wouldn't hold her world record without the 100+ miles per week. Talent is nothing without passion and dedication. How do we engender that love of sport, or anything else, in our children?
Another comment which comes up often, we talk about lack of facilities in the UK, well do you think that the Chinese or Romanian Gymnasts have the same facilities as the Americans? Of course not (well maybe these days), well good facilities are a great bonus, but hard work is more important.