"my guess is that the vast majority would opt for a cost-effective, fairly standardized large education provider"
Maybe, but we can observe:
1) intense competition for admission to the highest tier colleges
2) intense efforts by many inner city residents to place their kids in charter / special focus schools
3) strong correlations between perceived school quality and housing values
All of which suggests that many parents are actually quite focused on educational quality. That focus is often forestalled from becoming "effective demand" by the high opportunity cost on private education imposed by our public school system.
I don't know how real choice would emerge or how it would play out. I do know that more freedom would enable far more parents to translate their intense interest into much more effective action. It would also deny parents the excuse of poor schools, as they would choose the school, and schools the excuse of poor parenting, as they would be better able to choose the parents. Accountability would shift from procedural compliance to behaviors more likely to be conducive to learning.
Further, it would provide space for innovation. And when some innovation demonstrated better preparation for college, or graduation rates, or post-grad employment, there would be effective market pressure to emulate that innovation, and in an effective rather than formal manner.
It is likely the case that most schools would evolve to forms with great similarities to one another -- and why not, the majority of kids they're teaching are likely pretty similar on the important dimensions. The similarities would emerge after a process of _finding_ that most effective form, and weeding out the institutions that are providing suboptimal service. The freedom to migrate to new forms would constantly discipline those schools to avoid various distractions, or shift accountability. And it would provide greater flexibility to handle edge cases more effectively.
And in a more flexible system, educators would never ask to "slow a kid down" because of the problems the kid's speed poses to _their_ model. They would have to ask how to adjust that model to the kid's speed, lest they lose that kid's revenue to some model that can make the adjustment.