I think the best solution is to not have rigid grades. Each kid should have their own dedicated teacher who teaches them at their own pace. That way each kid is kept at the perfect level of difficulty, enough that they need to try really hard, but not enough that they are overwhelmed.
This might be impractical now, but in the future as technology gets better, I think that kids would benefit from being directed from their own personalized computer teacher, with a real teacher there just to manage the environment and address any circumstances that the computer teacher can't deal with, and for necessary group activities. That way each kid has an education that is tailored to them and nobody is lost in the cracks, bored kids becoming lazy, or overwhelmed kids learning to hate school and thinking of themselves as inferior or stupid.
We do it because it's practical and because it's scalable. We do it because we're a society that loves standards but doesn't really understand how they work. So we're comfortable painting everything as a bell curve.
The outcome is something resembling a lowest-common-denominator education for all. Outstanding students don't pull a class upward, but unproductive or struggling students do slow a class down. That sucks for the student who's ahead of the class, because her potential is being wasted. It also sucks for the student at the bottom of the class, because he shouldn't be there. (That sounds harsh, but it's true).
Solving this problem will require implementing a scalable way to aggregate students by some level or set of criteria other than age. We need to organize them somehow, because it's currently impractical to teach them all individually.
And it's tricky to organize them by any "potential"-based criterion at an arbitrary age, because the brain is changing almost continuously throughout childhood. Plucking a group of "gifted" students apart from the pack at, say, age 2 is poorly predictive of who actually turns out to have high potential later on. So we need to do better than that.
These are nontrivial challenges, but the solution would represent a giant leap forward in our society.
I agree with the elimination of grades, but I don't think a teacher per child is necessary. I don't have experience with kids, but I would prefer a system of "circles" and "levels".
For each discipline, there would be defined different levels of ability. To attain a level, you would have to go through exam. If you would fail, you could repeat the level (even multiple times). Each level would be attainable in about half-year of directed study. So there would be no grades, only levels - you couldn't get best grades, because there would always be some level above you which you would attempt to attain.
Now kids would be grouped into circles primarily based on ability at the discipline, not age. So you could be older in one group and younger in another, depending on how good you are. That way, the typical social hierarchy in classroom would be limited. I also think presence of the older kids could prevent lot of bullying, and kids could make more connections with other kids that are better or worse in different disciplines. Of course, there should be ingrained a culture of helping to learn (those with higher levels should help those with lower levels).
You could select yourself which levels in what disciplines you want to attain each semester, however there would probably be some basic total curriculum you have to go through. Also you couldn't opt for less total work; if you fail the level, you would have to repeat it, so you would be motivated not to fail.
Do away with grades and focus on effort, attention and output. And give kids three areas of focus and allow them to drop three subjects, keeping a core. In this age, kids need to develop deeper skills, faster and not memorize.
The important thing to memorize is how to look up what you've learned but forgotten. You don't need to store the entire database in RAM, just the indexes.
This might be impractical now, but in the future as technology gets better, I think that kids would benefit from being directed from their own personalized computer teacher, with a real teacher there just to manage the environment and address any circumstances that the computer teacher can't deal with, and for necessary group activities. That way each kid has an education that is tailored to them and nobody is lost in the cracks, bored kids becoming lazy, or overwhelmed kids learning to hate school and thinking of themselves as inferior or stupid.