This is a brilliant look at the system. And you are of course correct. There is an entire overhaul needed if we ever want to make learning more individualized. This will probably never happen. However, I included one link to a school trying it out, you would probably like it: http://www.theatlantic.com/magazine/archive/2010/07/the-litt...

Your conclusion is bang on, and yes the current system is set up in such a way that it classifies students as data in a system.