From another angle this is exactly what I was talking about on another forum awhile back in terms of teaching methodology.
Ideally, as an instructor you should want to have your students fully equipped, however, as has been mentioned few students ever get past the Shu stage, for various reasons (e.g. sensei wanting to keep them dependant or sensei themselves haven't moved past the Shu stage etc)
I propose that there should ideally be two versions of Shu-Ha-Ri:
1) The traditional model as James has stated and described above, over the entire career of a karateka but also
2) Applying the concept at every level of teaching
This second one could be vital in creating a well-rounded, practical, effective martial artist.
For example, teaching any kata, firstly as the instructor you would teach the basics (the SHU) - the individual techniques, showing the standard bunkai used, the form, dynamics, structure etc (use of kihon important here for training in individual sequences) then move onto HA - understanding the broader context of the kata's sequences and how to use it practically (which could be kihon kumite and for more advanced students jiyu ippon kumite)
Finally the RI stage the student begins to make parallels with other techniques and uses. How to effectivelly transfer the knowledge into new situations using jiyu kumite
This would fit nicely into Kolb's Experiential Learning Cycle which states that there are four stages in
effective learning and teaching - 1) Concrete Experience 2) Reflective Observation 3) Conceptualization 4) Testing in new situations.