@jojoc - you pretty much have it correct from my understanding. However, it seems that the K ratings for the smooths also refer to the size in some capacity.
All of the smooth pipes that I was looking at that were classified as KKs were on the smallish side, while the KKKKs are much bigger.
See my pic below of the two Trademarks that I just received; one on top is a KK 55, and the bottom is a KKKK 215. The 215 isn't that big (less than 6"), the 55 is just that small (less than 4.5").
But yes, as I understand it, a K "Castello" will have better grain (in Franco's opinion, mind you) than a KKKK "Trademark", but it could be a smaller pipe (generally), and a K "Collection" will have better grain than a KKKK "Castello", but again, it may be a smaller pipe.
As other members have pointed out, Castellos can be a little schizophrenic when it comes to grading and stamping. I found a gorgeous KKKK "Castello" Shape 65 that I'm holding out on, but it has a pretty sizable sand pit on the shank near the stem. How it was classified as a KKKK "Castello" and not a KK, or even a "Trademark", I'll never know. But it is a beautiful pipe with some outstanding grain, so maybe that outweighed the small flaw.
Bottom line... I love the brand and Franco stands behind his product. All of mine have smoked like a dream, and with the exception of the soft spot on the inside of my KKKK 55 (which Franco made right) I have had zero issues from my pipes.
But the easiest way to bypass all of this is go with a Sea Rock, a Natural Vergin or an Old Antiquari. The K system really only refers to the size in these lines and they all come from the same well-aged briar stock as the smooths. The texture and feel of my Sea Rocks cannot be beat in my opinion. Plus, they are quite a bit less expensive than the smooths (a KKKK Sea Rock will cost about the same as a KK Trademark).
So determine your budget and find some examples that work within that budget and look at the finishes/shapes that do it for you.
Then enjoy that sweet, sweet briar!