I wrote a much longer reply to this, then decided it was too long. The shorter version works out to:
1. No. History proves that "the market" cannot be trusted to regulate anything, including itself.
2. No--literacy and some other basic skills taught in schools are pretty much a necessity to function in society, and many kids won't learn them any other way. The problems with the current system could be greatly mitigated by adjusting the curriculum, letting students test out of classes by demonstrating mastery of the material (and holding back those who clearly don't have that mastery), and offering alternatives (primarily apprenticeship programs and early entry to postsecondary education) to adolescents. The problem isn't that education is compulsory, it's that it's presented in a one-size-fits-all manner. That just doesn't work.
3. This is two questions. The first requires some more specific explanation of what you mean by "experiments" before it can be answered. The second: assuming funds are properly divided within the system (meaning that, as much as possible, all schools provide similar facilities and levels of instruction), the kids should be the ones making the choice.
