“So for example, anyone using Bittorrent would have reduced speeds while anyone surfing the net, watching Youtube, playing online games, etc. wouldn’t notice any reduction in speed.”
That’s what they will do because they don’t want to adversely affect the other so-called “legitimate” usage. A VPN tunneled through SSH, for example, can circumvent a Bittorrent throttle. Some of them will still get the throughput they need that way for their torrents and the download traffic won’t implicate the school.
Meanwhile, they’re punishing everybody, including those who know pirated software, music and movies is illegal. This is exactly what net neutrality entails, which I am totally against.