You're right, it does sound bad.
Especially because you have no clue what her intelligence level is... She doesn't know lowercase letters because she's never WORKED with them before, because not all of us want to ship our kids off as early as age 3 or 4. (Or 5, for that matter, Which is I suppose why the government makes it mandatory.) Comparing her intelligence like that is like me telling you you're below average for not knowing how to insert a nasogastric tube or start an IV...You're not a doctor or a nurse, you've never worked with these things before because you've never had the need. That doesn't make you less-than.
Forcing younger and younger children to read and write ('mandatory' in preschool as you suggest) doesn't fix anything, It simply accommodates the problem, which is that our government is trying to cram too much into the 12 LONG years that children have to do school in, to "prepare them for college and the real world". Im sorry, but I don't feel that my 5 year old should be stressed about college and the real world at this time. She has her whole life to do that with the rest of us.
Point being, it is totally unneccessary to force children this young to learn these things. WE all dicked around in Kindergarten, just about everyone in our generation and before. And it was great. And by the time we were done with school, we had learned to read and write and do algebra and so on. There is no need to start earlier and earlier. 12 years is enough time to learn what is necessary to go to college or a career.
And I'm not yelling "at" you, per se, because as you said, you don't set the standards and I'm sure angry parents get infuriating at times. I however am venting to you, because it seems that you support teaching children and younger and younger ages, Not to mention you called my smart (not genius, but bright) child 'below average' because despite her reading full words, so long as they are uppercase, apparently to you, a child who can identify the letters, (fuck spelling or reading actual words) is advanced far beyond her. Therefore you maam are accommodating the problem as well.