Thanks binip, you've given me a lot to think about.
First, I wouldn't say homeschool is out of the question for both kids.  This was our first year, and DS is still reeling from 2 years of bad public school experience.  Could I have homeschooled both of them last fall?  No.  But I have no doubt that if DD needed to be home, we could make it work. 

Reminding DD to make her own work more challenging is a good idea.  She has done this in the past, and it's something I should remind her about again if she starts complaining about work being too easy.
School is about demonstrating existing knowledge for a lot of kids. That's the success. Not everyone likes demonstrating knowledge, but that's what it's about.
I know that this is true for many kids, but it shouldn't be.  In fact, this was a huge problem for DS last year.  He had been coasting by for his entire (short) school career.  Then all of a sudden he was accelerated 2 years in math, placed in a class where he *didn't* know all of the material, and freaked out.  Oops.  At some point kids are going to get to a class where it's about learning and not just demonstrating.  This may happen in elementary school, or maybe not until college.  But it's a disservice to those kids to allow them to think school is not about learning at all.
But I digress.  I'm really not interested in trying to change the system right now; our school system is too big and unwieldy for me to fight effectively.  I'm just looking for small fixes and ideas I can use to prevent DD from spiraling into something worse.