But if you had a kid, and you had two teachers, both of whom regularly got classes in the 50th percentile, and one teacher regularly had kids leave in the 40th percentile, the other in the 60th, which would you want? In fact, L.A. is already now in effect conducting the experiment: http://www.latimes.com/news/local/la-me-teachers-value-20100... and parents are responding accordingly -- for good reason.
Your concerns are valid, but they are mostly misguided if the alternative to them is "doing what we're doing now." See here: http://www.marginalrevolution.com/marginalrevolution/2010/08... for more; "We cannot simultaneously claim, however, that teachers are vitally important for the future of our children and also that their effectiveness should not be measured." Also see the list of education-related articles I compiled here: http://jseliger.com/2009/11/12/susan-engel-doesnt-get
If your argument is "nothing could be worse than the way it is today", I strongly disagree. More than 70% of Americans are satisfied (or better) with their own local school. High-stakes testing can easily make schools worse by disrupting curricula and damaging incentives for teachers. If we're going to focus our efforts on the school systems that are in crisis, there are probably better interventions.
Measuring teacher effectiveness is a real problem that needs real work, but in the interim, primum non nocere.
Also, the process MAY or MAY not have harmed other students -- there is no reason to believe it would, that I can tell -- again, please respond if there is.