Yes, I am all for technical leadership and giving people additional responsibility based on that but I think more organizations should take the 'people manager' approach managing people. In that case their lack of technical credentials can be accommodated by having 360 degree peer reviews for everyone. That has the added benefit of encouraging everyone to care more about what their colleagues think of them rather than one manager.
What often happens is a mediocre but ambitious engineer with only a few years experience tries hard to get into management track and succeeds. Sometimes they end up being good managers; sometimes they don't.