Yes I think the co-op is probably the way to go. They don't really want to go for formal school structure and want to be tied to the LA even less.
I think it's really the idea of some formal type lessons in a classroom of children, which we do anyway with organised visits, but having the premises now means that within HE circles we are able to offer these much more regularly.
Perhaps it's better left the way it is, informally, between the parents and with some outside folk coming in.
I recalled an article yonks ago in GreenParent about education and remembered someone in their had set up a small school, but I think that eventually failed, maybe it's the same one. I think their funding for the building ran out and they couldn't find anywhere else.