I don't know a kid who's been under this kind of educational system but a friend of mine way back in college believed in this. We were in 2nd year college when he dropped out. He's a Philosophy major. He contests the Philippine educational system because according to him, it doesn't really define what learning is.
He is actually a clever guy. Even without a degree, he was able to make a thorough research about K12 and he successfully defended it before PhD professors. I guess he believes in this "unschooling" stuff too.
I guess if your SIL wants to do this "unschooling" system, she must ready herself to support her child alone in his/her study as i think there aren't any establishment that employ this school of thought. It's a radical kind, IMHO, and may take up serious work.