Interesting question(s). It all depends on how big a rôle in primary and secondary education Apple sees for the iPad. My impression is they are more concerned with university presence, OiPS, one-ipad-per-student scenario. This doesn't preclude other uses, only such may not have been implemented optimally from the start. Most probably, however, any group administration will be done through a dedicated desktop- or web-tool, not from any "master iPad" device itself.
• "switch user" so that there is separation/privacy for each students work.
Probably not, with the exception that some privacy-critical common functions, like Mail, may have switchable profiles (plus "log me out after stipulated period of inactivity" options).
• I guess you could backup/restore for each student...
Done right, with virgin restore-image available right on the device, this needn't take long, and could be done in bulk by the teacher.
• Or use a VNC app and use the iPad as a dumb terminal...
A classroom full of $500 dumb terminals? Methinks not.