Sir, I also agree with your proposed solutions.Well, it should NOT be mostly dependent on the teachers. It should be dependent on standards and books.
If you keep passing kids who did poorly because the parents are your friends or they pay you up, then we're not going to improve no matter how brilliant the teacher is.
Standards must be high. And if one doesn't meet the standard, then the kid fails and retakes the subject.
Indeed, this is a very complex problem that requires multi-faceted solutions.
In my opinion, I would start with recruiting the best teachers (or maybe hire the best school principal). I have cited my experience with teachers who struggle with their English skills. And with daily contact, these errors get picked up by their students.
This time, I will cite my positive experience: When I studied Spanish years ago, the textbook that we were using had several errors (spelling, obsolete phrases, ect.), however the teachers were able to correct those errors. Some of us resisted the corrections; the teacher simply replied, "Don't believe the book, believe me. That phrase is awkward and is never used." They were also able to provide additional info that were not written in our textbooks.
I think it is a matter of prioritization (teacher first; or textbooks first). Both paths are OK as long as both problems get addressed.