Agree totally that it's about player development. When I say, "players preparing for competition," what I mean is "developing into competitive players," not "winning games." Those are very different concepts and methods, and at that age it's not about winning and losing games.
You're right, of course, about first touch; players need to get comfortable making the ball an extension of themselves. My reaction to the "juggle test" basically came from three points.
First, "If the parent sees the kid fail right in front of their eyes, it's a reality check, for both player and parent." Personally, I never use or allow the use of the word (or concept) "fail" in connection to player development. That concept is counter to the image of the player as a work in progress.
Second, while one of the most important things a player can learn at 9, 10, 11 is to control the ball and have a great first touch, perhaps just as important is to learn to love the game and have a genuine enjoyment of being a part of it. Putting a child on the spot so that they can "fail" in front of their parents might not be the best way to foster that. Embarrassment at that age seldom does. Perhaps a friendlier and more effective approach would be to invite the parent to watch a practice and point out specific skills to look for and compare their child's mastery to that of other players.
Third, I'm not sure all parents would understand the correlation between juggling skills and development for the game. If you told me, "Elite players can juggle for ten touches; your kid can't, so he's not elite," my question would be, "OK, but what else can or can't he do compared to the other players besides stand in place and juggle?" Heck, I know older players who can stand and juggle all day but can't work the ball up the field under pressure to save their lives. It would take more than that to provide a true "reality check" unless they really understand how the skills (or lack thereof) translate into play.
I agree wholeheartedly about training and games for development...I think we're really on the same page except for that reference to "fail"!