I think all students should be challenged to their fullest capacity. This is and should be the primary and overriding goal of education. I think this is sufficiently important to override any and all concerns about enabling the gifted to help raise up/elevate/tutor their less gifted classmates. I think that goal would be worthwhile if you had a mechanism to ensure interactions were positive, because in practice they are often antagonistic and highly negative.

The best known solution that I'm familiar with is to allow independent study work. Larger schools also allow for more coursework offerings, enabling far more than just two sets of courses.

I'm sure you won't be on board with this, because it's de facto segregation. It's an option that can be done today and is better able to offer appropriate challenges to students of all abilities.

I will take an option that serves the goal I consider of overriding importance over an uncertain rejection of a known solution with no other options on the table. I am hesitant to trade-off this primary goal via rejection of known methods to advance it in the interest of... let's go with the euphemism "encouraging peer instruction".