As an interested observer and dancer (not a teacher) it would seem to me
that it would be easier to evaluate a dancer if the teacher were clear on
exactly what he/she needs for the specific class. If the teacher wants
the class to be able to do a traditional dance from a talk-through,
anyone who can't manage this is not prepared for THAT class, regardless
of dancing expertise or experience. Similarly, if you will be teaching
complex modern dances, you may need all class members to know lots of
figures - that is not the place to learn crossover mirror reels, for
instance. Would you exclude someone who can do everything you require -
but with poor technique?
Just my amateur 2 cents to stir the pot.