Coleroo,
I think you probably summarized every parents worries and hopes pretty well.
Let me add a few thoughts:
1. Yes, college is an expensive place to "find yourself."
2. 90% of people who graduate college don't work in their chosen major. The bachelors is more important than the major.
3. With the 529 (probably the chosen account for education), it can used for a multitude of expenses and schools. If your child goes to automotive school for instance (these guys are like rocket scientists nowadays) or learns the electrician trade, often they need to buy their own tools. That would probably be a qualified expense. Maybe even the insurance on the tools.
4. I don't beleive in mandating all education but there is some things you would choose to mandate. Let's say one of my kids isn't academically inclined and just want to go "work." Well. . .they still need to take a course on Personal Finance and Communication, even if not for credit IMO.
Why? Because personal finance is a huge commodity skill in life and the best communicators rise to the top of any field (public speaking, 1 on 1 communicating).
So, at the very least, I will make my children take a course on this in "Listener" or "Audit" status, even if not for a grade. I may even make it for a grade and say they must get a B or better or re-take it.
5. Don't get hung up on penalties. I see many people, I'm even guilty of it. who figure, "I'm not going to do this because if it doesn't get used, than I get taxed!!!" Well, let's say you save $50,000 in 529 and your child refuses to use any of that money by age 28. He/she is just stubborn and won't ever take 1 class again because they hate school and it's a waste of time.
Wow - you would owe $5000 in taxes. You are left with $45,000.
There are worse things in the world.
I hope these thoughts offer you some direction - again, as I wrote above, I think a middle ground goal is probably the best compromise.
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