Hello Ethan, I was not there in the earliest days of the ABS so I have to go from my understanding of the history, mostly oral.  The testing program did not just appear in the form that it is in today, it evolved over the years, and continues to evolve today, or at least I hope it does as this is how improvements are made. 

Initially there was only the MS rating, and then the JS rating was introduced and I am sure there were changes to the requirements to better separate the two levels.  I believe the idea of making a dagger was ABS founder, Bill Moran's idea as he felt it represented a difficulty level high enough to discern a mastery of skills. I do not know the exact year the dagger was introduced.  I also do not know when the fluted handle and wire inlays became a requirement, but am sure they were added to show a more diverse skill set in the judging of Mastersmith, they are not your standard hunting knife features.

Other things have evolved as well, 300 layer damascus was added when the number of people doing pattern welding grew that the bar had to be raised a bit.  The ABS is in the job of education, and it is to their credit that they so affectively disseminated such skills among the population that just doing pattern welding was no longer enough to separate fairly new knifemakers from Masters. 

Other rules have been added to improve and bring more standardization the judging process. As I said, I hope the process can continue to improve to help those being judged as well as the judges.  I took time to talk with all of our MS applicants this last weekend at the show and listen to their input in hopes to add to my perspective on how the program can continue to improve.