A student's parents are nominally 100% in control of their children's schedule. If kids are getting dumped into your class, talk to their parents, and the parents can make things happen. Your kids complaining about it won't make a bit of difference - their parents might. If parents won't ask the counselors to fix the issue, it won't get fixed.
Separating kids by ability level is against the law. This is why you get kids who are in no way prepared for PAP in PAP classes - they can't legally be excluded. It was called tracking, and it was used as an end around for the ADA and Special Education. It was a complete violation of the letter and spirit of the law.
Separating kids by audition
is perfectly fine, so long as the course is described as such in the registration packet, and that every student has equal opportunity to audition for the course. Just make sure that you have "audition required" AND "directors choice" in the course requirements.
Are students supposed to have a choice in what enrichment classes they take? Or, can schools legally just place them in whatever they feel like?
Secondary question, are students supposed to legally be separated by ability level when it comes to band/other enrichment, or can as long as the subject is correct, it does not matter?