I am curious what you other Grimmers have decided your Babylon to be. Now, I am fairly certain that none of my group read this forum, so it is safe for me to say what mine is:
I have stolen my Babylon from Jack L. Chalker's Rings of the Masters series. That being: there are 5 rings scattered throughout the lands that the children must gather. Each of the rings bears the likeness of some birds except one - one ring has a small birdsitting in the middle of a fruit tree, another has two chickens standing abreast of each other, a third three doves flying so that their wings meet at the tips to form a circle, a fourth ring has four blackbirds taking flight in different directions, and the last is a series of circles overlapping each other to form a flower-like shape. (do you know what they represent?)
Each time they accomplish getting a ring (and a few other major storyline spots) they will graduate a Grade.
The children will not find them in numerical order, making their relationship harder to define until they are all together. In the end, once they have gathered all five rings they must take them to the World's Edge Mountains and find the passage to the Dragon's lair. Once they have satisfied they Dragon's requirements of them he will give them access to a chamber that has the faces of the Grimm Brothers, Hans Christian Anderson, L.Frank Baum and Lewis Carroll carved into the walls. Underneath each face is an area to insert one of the rings - and the children must figure out the proper order in which to place them, without mistakes, or be forever lost to the Grimm Lands. This Chamber is known as Babylon.