QUOTE(Solari @ Jul 23 2009, 12:18 PM)

I'm not keen on making things any harder than they should be

The bottom line is that, rightly or wrongly, the pieces are graded as if played as written on the page. Adding suitable ornaments and improvisation to the Baroque works around what is written would make the piece a higher grade, so isn't expected. Have a look at the following:

It's the opening of one of Telemann's Methodische Sonatas. The first line is the melody as would normally be written on the page. The second line is Telemann's guide to playing it. As you can see, there's a heck of a difference, and as far as grade 3 goes, they'd expect the first line to be played, not the second.
It's a shame, as focussing on playing what is written detracts from learning what is a necessary skill to really do Baroque works justice, and the earlier people start learning the techniques the better - I'd be far happier with the graded Baroque works being easier as written, but the performance expected to be of the same level.