I believe that until about 1995 there were fewer than 5 bond issuers subject to Chapter 11 proceedings (strategic bankruptcies) that were AAA at the time of the Chapter 11 filing: Texaco and, I think, Manville the asbestos maker. There was also one AAA muni bond that defaulted. There were several cases where issuers like Lilco (Long Island Lighting) were rapidly downgraded from AAA to junk.

i guess people either understand "grading on the curve" or not :)

Anyway, seems to be a business opportunity to start issue ratings for AAA papers, as obviously there is a lot of junk AAA out there.

The documentary "Inside Job" covers why and how the "grading on a curve" happened. I'd recommend it if you're at all interested in this stuff.

Also, just the amount of issuance will in itself increase the risk, as interest payments are higher.

I don't believe that this inherently true. The market generally revoles around risk, additional returns are possible when taking more risk. Higher rates of issuance just mean that there is more availability and possibly drive the prices down due to supply.

Now, a lower rating would result in a hirer interest, as lower ratings means higher risk (at least in theory, but what this article actually shows is that this isn't the case).

Higher issuance means that the company has higher leverage, which means higher risk. This should of course cut ratings, but might not.

Aren't most corporate bonds insured by a third party?

No that is not generally the case.