Grouping children by age is silly, of course, but maybe it's preferable to grouping "by level of intelligence". Why? First, you need to teach to the level per activity. A child that excels at reading may be slower at math, one that is good at math might be poor in art. And each child will have a different response to different teaching methods.

What we're looking for is individualized learning, where possible.

For example, I think it's crazy for teachers to lecture, when the best lecturers for any field can be found on-line. Why listen to someone drone on about the Battle of Hastings when you can have a professor who is passionate about exactly that doing the talking? Children should have the ability to explore topics and listen to lectures individually, moving at their own speed, and then come together to do group activities in class.