The "in-district" charter is a way of saying to a school district--superintendent and board--that they must give up some, but not all, control of a school so that it will improve its performance. The trick, of course, is how much control over what must be reassigned.
Recently, the mayor of Boston, Thomas Menino, said he wanted to convert that city's school district's 51 failing schools into "in-district" charters, by which he meant the schools would be controlled by city government and would be nonunion. Presumably he'd also want all the money the schools have coming to them. So what's the difference between this form of control and a "pure" charter school in which the district has no control, the union has no standing, and the money all goes to the school? Not much seems to be the answer. But in Menino's scenario the district would still own the assets--the buildings; employ the staff; provide central administrative services such as payroll; and be the recipient of funds for the system. Meanwhile, in theory, the schools under the mayor's control would be free to try new things.
We've had several experiences trying to negotiate into life a sort of hybrid charter--with unsatisfactory results.
In one case the school district superintendent persuaded the local organizers of a potential charter school to charter it "in district" instead. But he controlled the hiring of the school principal and most of the resources for the school. The school got off to a rocky start when decisions were not made on time and when he selected as principal someone who had little feel for what the new school was supposed to be about--and it was difficult for the organizers to do anything about the mess.
In another case, we needed superintendents in several districts to agree to allow "their" students to attend a new acceleration high school for half of every day. They knew they couldn't deliver the same quality program in their high schools, but they were not willing to "lose" half the funding for the pupils. Nor did they want to let their "better students" get out of their buildings for that long. (They were willing to hand over all of the funding for students in their alternative high school, who were dragging down the districts' test scores, if someone would take those kids off their hands.)
The lesson we learned from these experiences was that sharing control with a district (superintendent, board, unions) that cares more about money, image, and/or power than about performance and innovation will sooner or later compromise the performance and innovation. And what district doesn't care about those things more? In short, it's the rare school district that "plays well with others."
But maybe other school innovators have had better experiences. Let us know. | 
