I think in many ways, IEP's are just governmental CYA paperwork. Many of my students with IEP's never use the modifications, while others, it seems, are constantly be "re-evaluated" for what eventually seems to come across as laziness. I think most regular ed teachers (especially those of us who teach core subjects required for graduation, like English) can empathize with your situation.
That said, this is one of those battles I've also chosen not to fight. In classrooms of 30+ students (often with an inept inclusion "team teacher") I tend to teach all of my students at the lowest level and build up. I've found the most immediate success with providing class time for all assignments (essentially, I gave up on assigning homework as well, in favor of actually teaching students to think critically as I facilitate). In this way, in some classes, even my regular-ed students were essentially allowed a "no-fail" policy, as long as they were displaying effort in class.
And of course, ultimately, when it comes to graduation rates, English teachers were the most pressured to offer an "opportunity" for students to complete requirements essentially without a time goal. Ultimately, the highest grade they could accomplish was a D. In the end, I actually do think it is fair. A D ultimately reflects how very little effort was put in to the class, but essentially, it still gives those struggling students (attitudes or LD) a sense of accomplishment.
Another note: I rarely had an inclusion student who displayed effort in class make lower than a B or C. It was always those who also displayed apathetic attitudes toward learning, which, to me, is worthy of D.