Everyone recognizes Touma whether they realize it or not, the only ones who don't are other students. Think about it for a second, the dark side runs the light side, everything the light side is doing is a public face for what this "dark" side wants to do. It never comes off as what we'd consider a city, the whole place is a lab for something, and all the various organization, public services and institutions all serve one master.
Otherwise, everyone in the city is doubly incompetent, I mean, how else could Touma even be involved with that many separate city threatening incidents and never be brought in and just show up for school the next day? Everyone who needs to know knows, and those who don't know still know not to do anything to him and that he's "something" and that doesn't get him a level 1 rank or any other upgrade but it keeps him outta the interrogation room and from being expelled from school.
As for his teacher I always got the impressions she knows something, it's generally always been my read on adult characters that if they're not intervening they think you can handle shit.
From my understanding Academy City's the only one of its kind, meaning that while it's maybe cruel to rank people it's not dumb as the main goal of pretty much the whole city is to crank out espers, so, so what if it's a tad discriminatory and sends those with higher abilities to better schools? Academy City is more akin then to the Olympics and your ability to wield your power is your ability at your sport, and just like not everyone in the real world who skiis or whatever will get an olympic trainer because while they may be good at other stuff they just ain't great at skiing so it is with training to be an esper, the only "discriminatory" thing about it then is that they tied it into school, but even then, just don't go to be an esper? I assume this siscon magic show is fairly similar, perhaps the system is somewhat harsh, but I'm finding it hard to really care because don't you generally have to like try to get into those high schools? It's not like the high school I'm used to where I live there so it's the only one I go to, in Touma's case he's there for some undisclosed reason, guess he likes the city and being a level 0 so perhaps we shouldn't feel for him, and in the siscon show they really had to try and get into that school so in the end, it's what they all wanted, why should we feel bad for anyone? Why even hate a system, flawed or not, that's not mandatory and effects one industry? In neither world does it seem like mages and espers are the norm so clearly normal people are still doing just fine or they'd be attacking these guys on sight so we're essentially seeing the elite rank the elite in their non-compulsory setting and supposed to feel pitty or anger at the system? Not really feeling it.
And I can't decide which system is worse because while theoretically neither is mandatory, in mahouka you surely don't have to be a mage but then you don't have to be an esper anywhere else but Academy City, so Academy City's this weird kinda bubble that's like an Esper military town or maybe what it was like to be a scrub in Los Alamos during the development of the nuclear bomb where everyone's a big wig and you and your family's stuck dry cleaning their clothes. So for the son of the dry cleaner's in Academy City whose parent's don't want to leave and they're stuck choosing from nothing but schools that are trying to produce espers for the science machine, I guess life sucks but it's still hard to feel for Touma since it's presumably his choice.
I was hoping they were going to find some way to help her get back to more how she was when you first meet her. It had some funny antics but this was more of a serious couple episodes for Gintama. Feel bad for Mitsuba,Sougo and Hijikata. 
