This is absolutely correct. There always has to be more and harder stuff for kids to accomplish. If there's a ceiling, then smart kids will quickly hit the ceiling and then start measuring themselves by how much effort is required to stay there. That's the way it was at my school: all the honors/AP kids learned the same material, and in every class there were at least a couple of kids who got high As on most things. The only way to distinguish yourself was to do it without working hard, because you couldn't distinguish yourself by accomplishing more and harder things.

...or, praise them for working hard in a subject where they aren't talented enough to whip through the homework in ten minutes. If the kid is razor-sharp in math but merely above-average in reading, then their efforts in reading are the ones that particularly need encouragement.

(despite the elaborate caveat below, thank you for the detailed answer to my question; it seems like a very promising thing to try)

But if you treat the 10-minute homework as something not worthy of praise or mention, the child might feel cheated. Other kids are being praised for much less impressive efforts. I know I'm doing better than most in my class; why is this overlooked? Am I being penalized for my smarts? Perhaps I'm better off making the homework seem like a huge deal, and finishing it in two hours of seemingly herculean effort?

The parent may think it right to raise the bar as far as the child's aptitude allows, but the child won't necessarily feel this policy to be fair. And most children are naturally apt at gaming parental policies.