You've just made the case for the libertarian platform of limited government. Libertarians defend that the government should be shrunk down to the bare essentials because politicians are completely incapable of making competent technical decisions.

I'm well aware. Ron Paul is not the voice of libertarians everywhere, nor are his conceptions of libertarian education reform what I support. I didn't say I believe the federal government should stay completely out of education, I said that it should stay out of deciding educational topics. When I said I didn't like the idea of handing things off to states, I think of Paul because he supports moving from federal to states' rights, and under states' rights as he would like to have them, decisions are handed off from local politics to local regionally-based politico-educational power-brokers (district school administrators and, as you mention yourself, school boards). I disagree, because those guys happen to be even dumber than presidents and mayors. I want to go lower than that, I want teachers and school administrators to make decisions on what's taught in our schools. Also, federal funding is a different issue than curricula decisions.

Also, the market has ways of regulating quality and correcting bad decisions. One is criticism from outsiders. If that fails, low standardized test scores, rejection letters from colleges and job applications will make parents get the message and demand better quality.

I'm on board for the market comparison. Currently, using the free-market as a model for education system development falls through when one evaluates the current US public educational system through that lens, because it is specifically not even close to a free market (yet). And, since federal budgets are used to help finance schools, it is essential that the federal government get on board when it comes to distributing such tax money in order to force improvement in schools. Unless of course, you happen to believe that states will create improvement at the same pace when pressure is put on them. A free-market system can apply at both the federal and state levels.

1. Until college, students must attend regional public schools with very few exceptions. They are thus not free to take their education elsewhere without paying up the wazzoo or going to private school. This is why school vouchers are so important to me, allowing students to choose which school to attend and thus send their allocated money to is key to moving back towards a free-market model.
2. Parental demand is a poor way of regulating schools when my first point is true. Unintelligent and uneducated parents will often be unable to tell a good school from a bad one, which is why:
3. Regular, unbiased, quantitative and qualitative feedback on the success or lack thereof of students is essential. Free-market models also generally rely on informed decision-making, something that can't be attributed to American parents on the whole either. Where do they get feedback from? College acceptances are only applicable to high schools, and even then the path of blame can't be traced solely to them, poor pre-K to secondary school education also fall into the mix for screwing students over. Standardized test scores are ok, but then again, this creates a need for unbiased tests that are representative of the body of knowledge a student is expected to command at his or her particular age and education level. I studied and gamed my way (legally and on my own) into perfect scores on standardized tests repeatedly throughout my education. This is part of why the current No Child Left Behind act is failing: the tests don't represent the knowledge of the student, and so when schools teach to the test or when the student prepares for the test, the student misses out completely on certain sections of his or her education, and also results can't be counted on to judge the quality of the school's or student's performance. In addition to which:
4. Quantitative feedback is impossible without the creation of nationalized feedback systems. No matter what form, there needs to be standardized measurements. Thus, tests can't be limited by state, nor can they be limited to a county or to a district. In order to create such test, we need to have...well, national organizations to keep them regulated.

The US has a few success examples in education that I can think of offhand to demonstrate the principles I'm arguing for above:
The first is private high schools of a specific kind: Andover, Exeter, Lawrenceville, etc.
The second is magnet public high schools: TJ in Virginia, Hunter College in NYC, Stuyvesant, etc.
The third is the higher-education system, both undergraduate and graduate: Harvard, MIT, U. Chicago, etc.

In the three examples I've given, free-market-based attendance and thus improvement is pretty demonstrable, yet federal funding is also used to support these schools based on their performance as indicated by the students' attendance and performance. In the private and magnet high school examples, students are comparable to the best students worldwide. At the higher-education system, students are on average better than those at the same level of education in other countries. Nationalized education reform plans can be improved a lot from those ideas and those examples.

From YouTube Description:

Tornadoes - the nature's fury. A collection of spectacular tornado footage. The locations of the tornadoes you can see in this video are:

0:00 - 0:05: unknown tornadoes (F?)
0:06 - 0:07: Tornado in Dallas TX, April 2nd, 1957 (F3-F4)
Also see: Hypothetical F5 tornado hits downtown Dallas:
http://www.youtube.com/watch?v=q3u0Vu...
0:08 - 0:18: unknown tornadoes (F?)
0:19 - 0:31: Tornado near Attica KS, May 12, 2004 (F3?)
0:32 - 0:39: Tornado at Warner Robins Air Force Base in Georgia, April 30, 1953 (F4)
0:40 - 0:47: Fort Worth tornado TX, March 28, 2000 (F2)
More info:
http://www.youtube.com/watch?v=WECdzI...
0:48 - 0:52: Oklahoma tornado, May 3, 1999 (F5)
Extensive footage here:
http://www.youtube.com/watch?v=cJH4ry...
0:53 - 1:03: Tornado in L'Espluga de Francolí, Spain, August 31,1994 (F1-F2)
1:04 - 1:23: McConnell Air force Base, Wichita (Andover Kansas tornado), April 26, 1991 (F4)
Detailed footage:
http://www.youtube.com/watch?v=tfxVQs...
1:24 - 1:46: "Forest" tornado near Fridley in Minnesota, July 18, 1986 (F2)
1:47 - 2:34: Manchaster tornado, South Dakota, June 24, 2003 (F4)
More footage:
http://www.youtube.com/watch?v=bX4lGc...
2:35 - 3:26: Tornado near Columbus in Nebraska, June 17, 1998 (F3?)
More about the Columbus tornado: http://www.youtube.com/watch?v=WzL5GG...
3:27 - 4:00: Pampa tornado TX, June 8, 1995 (F3-F4)
The spotlights (3:37 + 3:46) are showing a flying car and a minivan.
4:01 - 4:42: Jarrell tornado TX, May 27, 1997 (F5)
More about:
http://www.youtube.com/watch?v=GrCLJu...

Damage footage:
5:38 - 5:46: destroyed truck in Simsboro Louisiana, November 30, 1996
5:47 - 5:58: destroyed car, Andover Kansas tornado, April 26, 1991
5:59 - 6:03: destroyed car, Jarrell tornado TX, May 27, 1997
6:15 - 6:28: Jarrell TX after the tornado, May 27, 1997
The other damage footage shows unknown places.