I cannot speak for the mysterious absence of “E,” except that it is often used to represent “Excellent” in the behavior section of report cards. (Elementary schools often have different letter grades for behavior than academics.)
Of course, this is no longer the case in numerous California districts such as mine. We have switched to the much confusing 1-2-3-4 grading system, where 1=not proficient; 2=approaching proficiency; 3= proficient; and 4=advanced proficient. Replace “proficient” in each of those with “grade level,” and you get the better idea of its meaning.
As for the 50%=failure, my understanding is that a skill is considered mastered at 80%. If it’s mastered at 80%, then 50% is you-have-a-vague-idea-but-not-a-complete-understanding of the concept.
Cite? Off hand, the Saxon math program we use in our distict has professed this after doing the research in developing the program.