This is a very difficult discussion, especially considering there are many countries and many schooling systems, but you have to admit there are common failings across systems.
> the hardworking but less gifted kids struggle
Sorry, I think I miscommunicated what I wanted to say, which is I know for a fact that there were people in my HS class that put in a lot more effort than I did, yet got worse grades, even in subjects (like literature) they cared about more than I did. In retrospect I kinda feel sorry for them and envious of them at the same - they got a lot more out of that class than I did by making effort.
> You say it allows smart but lazy people to succeed. In truth
I think this the issue of what they call the 'skills-based' education system. The 'Are you smarter than a 5th grader' type shows which translate well across cultures really show a trend - kids and teens are taught and tested on an immense breadth of subjects, most of which will be quite useless and forgotten, not only by adulthood, but by the time they graduate. The reason final exams tend to be 'skill-based' are to paper over this fact. Most kids don't really remember much about the composition of the water table, but can write an essay. Smart kids are usually better at writing essays, than not so smart ones given an equal amount of practice. So basically they force you to learn stuff you're not interested in, are liable to forget and won't matter in terms of your future, even in the scope of the narrowly defined schooling system.
> it allows many kinds of people to succeed.
This is what's not really true imo. It's essentially a 'Kid Job' where you have to blindly submit to authority, follow instructions, not seek meaning in what you do, and not act out. They're just conditioning you to the fact that your prime waking hours will be essentially thrown away for most of your adult life (for most people).
If you can do that, and you live in an okayish country, you can get through life doing alright by doing that, so by that definition its true.
But the only people who are rewarded by the (academic) purpose of the schooling system, are the ones who excel at core subjects. If you're a gifted artist, but suck at math, you'll likely not enjoy being in the system.
Most people, dumb or smart, could likely end up in the same place in life playing video games in their youth, instead of going to school.