The first time girls have to tryout for cheer in CP's school district is at the end of 6th grade for our 7-8th grade middle school squad. Up till then the only cheer option is an everyone makes it youth program - which has dwindling numbers as the girls get older (1st grade squad will have 36+ kids, but by the time you get to the 6th grade squad only 15-20 are still doing it).
Everyone that tries out for the MS squad definitely does not make it - it is very competitive for the 6th graders trying to get in as 7th graders as they tend to favor the girls who are going to be 8th graders (which is understandable).
IMO, and this is just coming from a mom and a former young girl myself ;), think 6/7th grade is a little late to introduce the "not everyone makes it" concept to these girls. I actually think it some ways girls are more emotionally fragile at 12/13 than they are at say 9/10, and it's harder on their self esteem. It's also a little late in the game for a 12 year old w/o any skills to "catch up" by working hard for next year if they really want it. Like a 9 year old has a better shot at getting her backhandspring in time for next year's tryouts than a 12/13 year old just cause they are less afraid, have less academic obligations, etc.
To me, however, the most important thing about cheer tryouts is that they really are fair and that there is integrity to the process. That means no taking Suzie who can't dance jump or tumble just cause her mom cheered there 25 years ago and is good friends w/ the right people when more talented girls are turned away. Being known as a school where politics dictate who makes the cheerleading squad is just the worst - yuck ;/.