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Would be curious if anyone has any studies supporting either arrangement. I remember hearing from a lot of professors that the average learning of a group grows when you mix people of different skill levels and that splitting classes on skills leaves everyone but the top students far worse off.

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Sure, it may raise the skill levels of one group and at the cost of another group who is held back because of the pace.

But shouldn’t public education be dedicated to make society as a whole more intelligent and not a few individuals who are “gifted?” Doesn’t society benefit much more that way?

Yes, but not at the expense of holding other people back.

Trust me, being asked to play 'second fiddle' so that someone else can have the same 'outcome' but without doing the work, is far more discouraging and damaging to those who put in the work.

Merit, and hard work needs to be recognized, not ignored.

You just echoed your last point and school already has a method for recognizing hard work, grades.

So does the work load and pace stay at the average classes setting? Or does it scale up to the honors classes and leave more kids behind? Getting an A in an honors class is more valuable than an A in a regular class, just like how placing first in the olympics is more prestigious than first at the county meet.

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