You have a point. But SOMETHING needs to be done for the kids that have had their records lost. I'm sure someone can come up with a better idea than I have.
If the student's records are lost, the best thing to do is placement testing. There is nothing sinister in that. Or, let them place themselves in the grade they think they belong in, and see their performance. Good school districts have no problem shiften students to the classes they are best suited for.
This is a multiple host-State problem with varying curriculum requirements. Each State will have to come up with their custom solution. It's a geographically logistical nightmare where all States will need to have an "equal/fairness" policy.
Too bad we don't have a national curriculum...it would help in this instance.