Outside of transparency, this strikes me as no different from the "grade" systems at various big companies like HP, IBM, etc. If you want to pay me fairly, pay me what the market says I'm worth.
Things also get super messy when you get people to try and review/make objective assessments of their own skills and others'.
"Most of us are a 1 or a 2" -- aiming high is great and all, but I would be pissed if I was the most consistently good engineer in the company yet didn't get some multiple of my salary because the "best" at the company is a 2 because of the ridiculously high bar that is set. Also I can definitely see a system like this trampling all over developers who should be paid more but THINK they're not that valuable, or afraid to assert themselves.
This calculator just makes me think it serves as an effective way to pay people less than what they're worth, and convince those same people that they're getting treated fairly. You should not be counting on your company to pay you what you are worth, regardless of whatever rubrics or whatever they show you.