I've never tried hash made out of indoor grown plants. Might be something, and I've heard that some dispensaries in Cali specializes in it. I'm far from Cali though, and good Moroccan hash is good - really good, or too good to say my point! But that stuff doesn't reach us far up in the northern corner of Europe. What greedy people do is buy quality stuff from the south, dilute it with whatever they find suitable and sell it to make a good (I'd say evil) profit.
Well, making 'all drugs' legal could have it's side effects, let alone the discussable morale in offering citizens highly addictive substances and making profit from it. I think the equation is more complicated. In general, however, I like to think that most people wouldn't be so stupid that they'd fall for it, and with the education program you suggested, Dopey Jim, there might be some sense to it. The problem is that there will always be greedy people around (look at the tobacco industry for example) who don't mind selling diseases to others, and within the capitalist West it's usually those who're most effective in lobbying for their gains - so we can't tell where things would end up!
Personally I believe we need to educate people in a direction where they'll mature and realize life has much to offer in a sober state of mind. For example, I hate the alcohol tradition of my own culture, and would love to get rid of it. Yet I realize that it's a long way to go, and that zero tolerance can never succeed - as history has shown us. Some sort of regulation will be needed, and from here I pass the ball over to you guys...