Val,
I tend to agree with you. Old-fashioned ability grouping would solve a lot of problems. Every step of the way a child either can or he can't. He either knows or he doesn't know. These things are easily determined without the need of an "IQ" test.
There shouldn't be a single "gifted" kindergarten class. Instead there might be one section for students who arrive functioning at about the second-grade level, two sections for those who arrive functioning at about the first grade level, a dozen sections for average kids, and then a few sections for kids who are behind the curve and need to be taught such things as letter recognition and print orientation. Getting students properly placed might take a couple of weeks, but it would be well worth the effort.