For Frances5- you make several points Frances, all of them valid.
Research is still going on concerning dyslexia- it is being researched by the top professors at Oxford Uni etc etc.
Basically, it is due to an imbalance in the neurologcal make up of the brain - we have a right and left hemisphere and each controls different actions/thoughts. Dyslexics are often termed "right brainers" because they have higher functioning on the right side- which means that the left side- which controls language, speech and reading, is not so well developed.
Children can have problems with phonological processing if they have had glue ear at a crucial stage of language development, but that doesn't mean they are dyslexic. Some dyslexics have eye sight problems, as the muscles don't coordinate properly,but dyslexia is not an "eyesight" problem.
Dyslexia is essentially a problem with working memory, so that the sound and sight of letters are not retained.
The way that dyslexia is assessed- and you seem to be aware of this- is to look for a gap between a child's potential (their underlying ability or IQ) and their current performance (achievement). If lots of the sub-tests on the assessment pick up weaknesses in processing speed, working memory, poor auditory or visual discrimination, amongst other things. If no other reason can be found for a child's literacy problems, then dyslexia is usually diagnosed. For instance, Iknow of a child whose IQ was in the top 1% of the population, (IQ over 135) but was 3 years behind in reading and spelling for that level of ability. The effect on their self esteem was obvious, until they discovered they were in fact bright- but had a problem, which is actually classed as a disability at work and at university - where dyslexics are eligible for help.
Personally, I think it helps to have an assessment regardless of the cost as if nothing else it assures the child that they are "thick". It also gives professional dyslexia teachers a starting point, as they then know whether a child learns best through an auditory or visual or kinaesthetic route.
At school the teacher can and should use a whole class appraoch using a multi sensory method which will help all children to learn, dyslexic or not- that is the basis of the new synthetic phonics (which is actually how I was taught in the 1950s!), rather than the mix oflook and say, flash cards etc, which has been around for the past 20 years.