At my school, students were failing horribly. I don't think a general lack of interest leads to failing (the average for Chemistry was 36% in Unit 1). But what you're saying is true. 
I'm always of the belief that if you put time and effort into what you do, you will exceed your expectations, sure you might not be the best, but you will do well. Thus I think that generally, if a student fails a subject, then either they didn't put in the work required (i.e. lack of interest amongst other reasons too) or the subject does not suit their learning style - note that this doesn't mean that the subject is too hard for them.
I just feel like I have to point out that there are people who think that the Maths/Science subjects are generally hard whereas the Humanities subjects are generally easy, however this is not true, it depends on which subjects suit your learning style. I have a friend who doesn't do well in Maths at all, however, they got a superb ATAR (99.00+) by doing subjects which they knew they were good at.
I don't think teachers should be allowed to do this. When I was in year 10 at subject selection interviews, they recommended that I did further maths instead of methods and GMA (year 11 specialist). I told them that I really wanted to do those subjects and nothing they could say would influence my decision. They were quite hesitant about it, and at one stage they were willing to 'compromise' and let me do methods but not GMA. But I kept pushing through with it and eventually they gave in and let me do it. Now I am the top maths student in my school.
Now that leads me onto this, now you're right, students should have a say as to whether they want to do a subject or not but I think that teachers should also have a say as well, as you know there might be many reasons why a student might want to do a particular subject. And sometimes, they do subjects like specialist maths for the wrong reasons (scaling...etc.)