I have 3 characters, wanting to progress to Samurai. I found the baton, but when i returned to the Dojo only one character, the one with the baton, got the quest completed. My question is this: how do i progress other characters into the class without another baton?

Ok if all 3 characters took the quest at the same time, simply exit the the shop and re-enter with a different character. It should tell you the Baton has already been returned but you still get the accomplishment for the quest.