anamax, you clearly have some experience here. To add to your points: (1) I've never met an adminstrator that said that test scores were the ideal measure of a teacher, it's just that its the best they have. Furthermore, (2) the tests are
made by teachers. If they don't like what is being tested, then change it.
When news came down the pipe that Virginia was going to have a "Standards of Learning" type exam for colleges, the first thing I did was jump on board to help scope (and my plan was to help author) the test (I was physics faculty). I'm no fool: if we're going to give the administration a vehicle this powerful, I'm driving.
On the other hand, when the Standards of Learning for K-12 schools were first implemented, a remarkable thing occurred in education: teachers started talking about teaching again. Until then, every conversation with them was about how bad the administration was, how difficult parents were, how unprepared and unmotivated the kids were, etc. When those tests went in the conversation turned to: how in the world am I going to teach all of this?
How in the world, indeed.
You are also correct that the way peer review is implemented leads either to back scratching or very poor morale. The way to do it is to get folks from one institution to review folks (as a team) from another. That would place a huge demand on the personnel, though, and I think you would have trouble getting it in place.