Why is it that you think that? For a small to mid sized company, developer roles of [Junior Dev, Dev, Senior Dev, Principal Dev, Architect] are not uncommon. In that scale, someone who "is an individual contributor, with the ability to mentor others" fits into "Senior Dev". It is entirely possible to be _amazing_ as an individual contributor... or be just barely able to fulfill the role. But moving up in the ladder isn't correct, since that indicates a change in roles.
For large companies, that distinguish between "role" and "level", sure. But a LOT of companies aren't big enough to do that.
Rockstar/meh is perhaps rather untactful or even false way to describe situation. But level thing is not gonna solve the issue because company can't keep too much of difference in level if they both have same "X" years of experience. It will again lead to visible dissatisfaction or even lawsuits.
That's BS. I can't sue my company because I'm a midlevel dev with 10 years experience and an MS, just because a coworker of mine who started at the same time is 3 levels above me in a manager role probably making 2x what I do.
My dissatisfaction has nothing to do with that person's performance. In fact, I was glad they gave him a distinguished rating when we worked together - he deserved it. What I do have a problem with is that the department breaks enterprise policy by mandating a manager pick someone for a bad rating to balance out the high rating. They picked me. My dissatisfaction is solely with the broken policies and not with someone being justly rewarded.