I don't know how you conclude this approach sets up children to fail. It doesn't!
I've worked in the field of SEN since 1985 and have an autistic dd who is coming up for 19. I can state categorically that if you start from where the child is, and aim for an optimal living and learning environment, they have the greatest chance to develop and learn and cope as adults, whether that's in supported, semi-supported or independent living. The aim isn't to try and make everyone 'normal'. It's about finding the best pathway for each individual. It may not be about getting a job and getting married.
It is an approach that nurtures success not sets anyone up for failure. As children develop and learn the nature of that 'optimal' environment changes. For most, but not all, it gradually moves towards a more typical set of experiences.
Mainstream primary school completely destroyed my daughter. Physically, mentally and emotionally. After 3 years of being pushed to fit the 'typical' I finally convinced the powers that be, that a school environment was not right for her. We'd tried every type of mainstream and specialist provision and the destruction continued. Till ultimately she was assessed as needing education other than at school and the LA had fund home based provision. I've lost count of the number of people, professionals and friends, who told me that dd needed to learn that the world didn't revolve around her, that she'll never get a job if she's stuck at home, that I was setting her up to fail because the real world wouldn't adapt for her , that by not insisting on school I was not setting firm boundaries, that dd wouldn't make friends if she didn't go to school......
Well, DD has been nurtured and is now thriving. She has a job, a boyfriend, drives a car....Her years of highly unusual living and learning environment haven't stopped her from having an active role in that 'real' world. She's learned to be an autistic adult in a non-autistic world. She was only able to do that by spending a long time learning about herself, her autism and mental health and what works best for her, not just academic studies. It all takes its toll mind you, and people who know her in a work situation would be shocked to see what adaptations are still needed at home to compensate for energy expended on functioning in the 'real world'.
Learning at home isn't the right environment for everyone. I've seen the same pattern of growth for example when a mainstream environment wasn't meeting a child's needs but parents were convinced that this was the best place to be if their child was going to 'make it' in the 'real world', and then eventually when the child moved to a specialist provision, they blossomed because they had access to an adaptations that the mainstream classroom couldn't provide. Its like planting a tree in the right soil and watching it bloom.
Mainstream might be the right environment. But too often, the adaptations needed to support the child in that mainstream are not made. There's a prevailing attitude that child should have the fewest adaptations possible, rather than the greatest number, to make their lives and learning easier.
Imagine if you signed up for an evening class to learn a new language, and turned up to find that room you would be learning in was stifling hot, there was drilling going on in the room next door, that the chairs were rock hard the wrong height for the tables, that the teacher spoke so softly you had to struggle to hear, and that everyone else in the class had been sent an introductory booklet that you hadn't received and so you didn't know what was going on but they did. I'm guessing you would want some changes to the environment before you could happily learn there. You might be a bit irritated if you were told that next week you should wear lighter clothing and bring more water to cope with the heat, "do better listening" to the teacher, not wriggle on your chair because its distracting, pay more attention because everyone else knew what was going on ....