I believe it's a combination of reality and compassion. Imagine how much better the public schools would be if everybody who could homeschool, did homeschool. That would free up quite a few resources the public school could use to better educate those who can't homeschool.
I would home-school if:
a) I had a child
b) my town population was greater than 10,000
There could be other factors, of course. The population is key to me. I just love small towns, I guess.
I think you're missing the point. The public schools need genuine competition to spur them to better use the vast sums of money they have.
Allowing the public schools to continue their monopoly grip on taxpayer monies while taking away the burden to teach the home schoolers is the most perverse solution of all because it will only encourage the public school to be more slothful and liberal than they presently are.
Until and unless the public schools have to compete across the board for students and money, we will continue to see low test scores and taxpayer-subsidized leftist indoctrination in the classroom.