If you are going to have schools for specially gifted kids (which you agree is a logistical necessity) you have to select at some point which kids go to those schools and which do not. How is this compatible with your bald statement that selection at a given age is wrong? If it is wrong at one age (the age presumably that the school starts from) then surely it is wrong at any other age as well?
You also said: segregating the entire school population into two halves is a million miles away from providing special tuition for the especially gifted, (at the very least implying that the latter was OK but not the former) but then went on to say that this tuition could not logistically be provided other than in specialist schools - i e the option you said was not acceptable! You really can't have it both ways...
WRT the 'rising educational standard' - I do not believe that it is that much higher - yes, the number of GCSE's etc is rising, but that is for a combination of reasons, not least the fact that the exams are a small part of the final marks, that the kids are being given several chances at submitting the modular assessment papers, and that they are being better taught how to pass the exams (as opposed to being taught the knowledge). I also believe that actually the syllabus is easier in many subjects than when I was at school.
Yes, more people are getting degrees, but is that because they are better taught, or simply because they are not being told they are incapable of doing a degree? (i e if the same number of people had applied for uni (and there had been places for them) when I was at uni as there are now, would there have been the same number of graduates? (As another possible solution, what proportion of graduates now have degrees in 'soft' subjects compared to, say, 20 years ago?)
On that topic, is is actually sensible for some of these subjects to be 'degree' subjects? - would it be better for a plumber (say) to have City & Guilds qualification or a degree? I know which I would be more likely to employ!
I am not saying that the old system was better - simply that the comparison is much harder than you are suggesting, because so many of the parameters are completely different.