QuietTiger - I have to disagree with you re: the welfare of "organic" dairy producing animals. I buy Soil Association Approved products, and they state:
"The welfare of animals is central to Soil Association organic principles. Our standards mean:
* No factory farming
* Lots of outdoor space and fresh air
* Encouragement of normal animal behaviour
* No routine use of drugs and vaccines
* No genetically modified (GM) feed or growth hormones
* Minimised stress in transport and slaughter "
Also:
"Organic farming works to minimise animal stress through good management techniques, providing good housing, adequate bedding and mixed or clean grazing (which helps keep down parasite-related diseases). On organic farms, ?native? breeds often play an important role in ensuring the positive health of animals. They have adapted to include suitability to locality (climate, elevation and soils), hardiness, disease resistance, temperament, and ability to thrive on a high roughage diet."
There are VAST differences between farming practices, and by buying SA approved products I hope to be buying at the more humane end of the industry. Now I'm under no illusion that the cows are frolicking down from the meadows proffering their udders for a joyful milking, but like I said, it's the best I can do, short of becoming vegan.
Bumpsadaisie's solution sounds absolutely great to me. I wouldn't do it as a) I live in a city with no garden 
and b) I don't really want to eat meat that badly. I'm pretty sure I would find it almost impossible to "pull the trigger" myself, unless I was absolutely starving and in some apocalyptic "wilderness" scenario as mentioned above.
So no, I don't think it is morally wrong for humans to kill animals in an absolute sense. I do think that "our" (i.e. Western society's) perception of / attitude towards meat eating and farming is massively fucked up though. And what makes me most angry is the utter hypocrisy of people who eat cheap meat from cruelly raised animals, but refuse to even think about it. I'm quite certain that if these people were forced to watch the production of their "meat" from birth, through a miserable life, to abbatoir, and to "pull the trigger" themselves, they would not be prepared to do it. Just because they are paying someone else to do the dirty work doesn't exempt them from the consequences of their desire for a steak / chicken nugget / bacon roll.
exoticfruits - I suspect no one answered your questions, becasue they;re a bit bizarre, but here goes:
What about wool production? What happens to the dead sheep after a lifetime of producing wool?
No problem with wool production, as long as the sheep are treated humanely. I don't really understand why the dead sheep are a problem.
What happens to the pet food industry? What will the family cat and dog eat?
Well when I was a kid the neighbouring farmers had cats who caught their own food. The owners just provided water. The cats looked v healthy. No idea about dogs, but Valhalla seems to have found a reasonable solution. Maybe people should spend a few minutes thinking about the impact that their pets might have before committing to buying them.
Won't you mind a limited number of museum farms around the country and no lambs in the field etc?
Well, I'm guessing that if people ate more vegetarian food their would be a greater demand for arable farming. So it's not like farming would cease to exist! And actually it was watching the lambs in the field that finally converted me to being veggie! I don't feel particularly warm and fuzzy watching lambs in the field knowing that they are going to be slaughtered in a few months time.
What will happen to the Welsh hills, Lakeland fells etc without grazing
I guess they'll change. Not all change is bad!