On the issue of withholding diplomas, that’s a matter of state and local policy. It’s certainly not mandated by the standards; it’s not even mandated by NCLB. I don’t have a preconceived position on it; it depends so much local conditions, how many students are effected, the school culture, and so on.
As for how the standards were chosen, that’s a long story. The list of sources in the bibliography gives some idea of the answer. Certainly recent reports such as Curriculum Focal Points, the NRC early childhood learning report, and the report of the National Mathematics Advisory Panel were influential. Also the standards of high-achieving countries and states. And, perhaps most importantly, the progressions documents written by the work team, which we are no slowing bringing into final form.