My god, when I read stuff like this (and some comments here), I think -- only someone who grew up in a society which benefitted from all the supposed ills of education and useful institutions could even have the luxury to write or seriously believe something like this. This is like saying that because of a small percentage of (yes, I agree) non-ideal outcomes, one should dismantle the entire system that has gotten us…
Deschooling has a lot of material to consume, and the term is pretty strong sounding, so I don't think it's surprising, but your conclusion that Illich wants to "dismantle the entire system" is far from most readings of his work. Wikipedia [0] has a good summary of the idea IRT schooling in general - it's basically a philosophical position that people are better at learning when they actually have interest in a given…
I will say the idea of "teaching to the test" which this sounds like, is of course not a good approach. But not everyone can have a Socrates as teacher. All the more so when we refuse to fund schools as they should be. And not everyone is a Plato and can handle an inspirational deschooled approach.
Either way, we should fund it correctly. As others have said, we pay now, or we pay later. I prefer to pay now. It's cheaper.