1. The school system has been broken for many years. Learning from people who are not passionate about what they teach is the main concern I have. You can easily tell the difference of "engaged" students who have a great teacher they will remember forever vs. "disengaged" students who will be able to tell you how bad their teacher was. I think Montessori-esq / curiosity driven schooling is the future given 2/3 the world is on the internet and there's actually exciting, inspiring, and engaging teachers around the world doing an amazing job. (i.e. Khan from Khan Academy really paved the way here)
2. These rules work because there's a significantly smaller portion of the population who truly knows themselves and embraces their eccentric characteristics. We typically lose our identity when going through a formal means of schooling because we want to fit in and thus be "average". Even those valedictorians are quite "average" outside of working harder to get perfect grades. How many do you know that went on to do the amazing things expected of them? Usually it's the people who were eccentric and didn't do so well in school.