'Well these kids would presumably be the same ones going on to University where in many cases the first year does not count towards their final degree and where students only have to get a 'pass' mark to progress to their second year.'
The point being.....
They are at University. I hope they would have sufficient maturity to work whether exams 'counted' or not. Plus even if the first year does not count, courses will be the basis of study in second or third years, and marks could well influence whether you get a summer internship or, if part of the degree, a work placement. I do not understand why anyone would go to university, pay fees and living costs, and then decide a first year did not count.
I would second considering a gap year.
What you are proposing is a compulsory gap six months for everyone. On the basis, which again I don't understand, that it makes the system fairer and more transparent for everyone.
DD has a place, but is taking a gap year anyway, and it's proving a really positive experience. She has picked up plenty of additional skills that will help her transition to university. (And to avoid any claims that a gap year is only available to the middle classes, the diversity of those doing the ski season with her is wide and includes kids heading towards apprenticeships, on work placements from catering college, and heading for, or just finished at, Universities from the top and bottom of the League tables, or those who have left school with no plans.)
Finding a University course at the right level is important. Some friends of DC have found themselves on courses that are not particularly stretching, and have regretted it. If you are on a course which is too tough it is probably possible to transfer to something gentler after the first year, but probably not the other way round.
My approach would be to firm and insure the two favourite courses, regardless of grades, and then work like blazes to get those grades. If you don't one of the following will happen:
a) they take you anyway
b) they offer you a similar course at the same university. (This happened to a friend of DDs and it really suits him. Plus I think he has the option of transferring back to his preferred course if he does well enough in his first year, which he could well do.)
c) you go through clearing, perhaps landing the "two grades lower" course you had thought of insuring.
d) you take a gap year and rethink. You are then a year older with some experience outside school and may well have refined what you thought you wanted to do. And when you arrive at University with more maturity.