Great thread (I love these questions) but TK-8114 is right of course...
I've heard it all, they show rank, the ear marks show rank, the pauldrons are only sandtroopers, they're for everyone, Lucas shaved his beard this week... I've heard it all.
Obviously you don't apply to get in the 501st with a pauldron on a TK, but our Squad Leader wears one now and then on his TK. It works. And in the EU / comics and stuff TKs are always wearing them.
I like to think more than "rank" it was a way of showing special training in a division. Sort of like berets. Green, red, black... they're all elite, but they mean different elite areas. So sure, a green beret will be "higher rank" than a normal marine, but maybe not in actual rank... just in training and expertise. This example works with the sandtroopers. They were, at least in part, one of detachments from Vader's ship, but it has been alluded to since that they were "specially trained."
So yeah, I like to think the pauldrons mean you had extra training in one area or another.