I've never understood this mentality. Sure, there's the consolation of "being able to focus on the league", but by no means can I see it being particularly better if you were knocked out. A premiership team in the 3rd round (if you get through) could for example give you a test to see what sort of level you're at. And besides, a decent cup run will only raise spirits surely.
I would agree however to playing some of the younger lads.
Why do we need to know what level we're at? We just need to keep winning in the Championship.