Mrs Allan said that HMI and education authorities should work together more closely so that authorities' judgments on their own schools, based on the same performance indicators that the inspectorate uses, could release HMI from "the inspection treadmill".
Only schools about which an authority had expressed concern should prompt a full external inspection, she suggested.
Mrs Allan acknowledged, however, that education authorities' record in helping schools improve was weak. The findings in the recent Audit Commission report that councils in England were not "adding value" made for sad reading nd she did not believe the picture in Scotland was dissimilar.
In a report card on the inspectorate's record, Mrs Allan said HMI had made a positive contribution to the debates on school improvement, standards, quality and performance.
But the part it played in the development of the curriculum had been "inconsistent", she believed. "I hope by the time I retire we will have a full debate which will lead to a curriculum vastly different from what it is now," Mrs Allan said.
The inspectorate would also have to become much more involved in evaluating education's contribution across a broad front, including children's services planning, the inclusiveness agenda, the impact of drug action teams and the new "children's change fund".