I find myself kind of annoyed by it, and rather glad I'll never have to deal with sending kids to school here. I think I'd have to have them opt out (at least until they were old enough to decide for themselves), and it would be extremely awkward, to say the least.
I wouldn't have any problem with a general RE class, as envisioned by the government's standards. As I've understood it, it's simply meant to be comparative world religions and ethics, with a slight emphasis on Christianity for cultural literacy. Unfortunately, that's certainly not what goes on here. Classes are split up by denomination; one group's lessons are nothing but dogma and intolerance, and the Everyone Else lessons are completely neglected. And as for religious assemblies, I see absolutely no point there.
Thing is...I'm not an atheist! I'm actually a (very liberal, pretty un-orthodox) Christian myself. Which is another reason that having religion in schools really bothers me. I believe it's the responsibility of families, and of faith communities, to provide spiritual guidance and religious and moral instruction. Call me a control freak, but if my kids were getting a religious message, I'd want to know exactly what the message was, and make sure that it meshed with the beliefs I'm trying to instill. There are all sorts of 'Christian' ideas and doctrines that I wouldn't want anywhere near my kids, and I wouldn't be at all happy letting the school system (particularly our local one!) make those decisions.
More generally, I think religion in schools is bad for religion as a whole. When you've got religious content in school, I think two things happen. First, it becomes very easy for parents and families to become lazy. Why make the effort to haul the kids out of bed for Sunday School, or drag them to Catechism classes, when they'll learn it in RE anyway? Second, from the kids' perspective, it becomes one more set of workbooks that they can't see ever being relevant once they've left school (a belief that's reinforced when their parents don't make it a priority). I think these are particular problems for the 'dominant' religion, and I think it helps explain the decline in attendance membership, especially in the established churches.
I try to explain this to my Fundie family members at home, whenever they go on about getting God back into schools, but it doesn't compute. Then again, if I'm right, maybe it would be best thing that could happen to the U.S.!