Is there any school building in any city — and I mean globally — that occupies a more astounding location? This is not parochial hyperbole talking. Edinburgh’s Old Royal High School sits resplendent against the south face of Calton Hill, its broad neoclassical facade looking out uninterrupted over Arthur’s Seat. The aspect is staggering. Purely as a piece of architecture, it’s the jewel in the crown of Georgian Edinburgh: Thomas Hamilton’s master statement that, along with Nelson’s Column and the Parthenon-inspired National Monument atop Calton Hill, earned the city its nickname "The Athens of the North". And yet arguably more important is the building’s symbolism as a place of learning. Step out of its monumental doors as a student and the world lies at your feet.

The building was last used as a school in the 1960s, since when its fate has hung in the balance. In recent years, Edinburgh City Council has looked set on applying the same short-gain commercial criteria with which it has divvied up so much of central Edinburgh; indeed, a new luxury hotel has been notionally on the cards for the site since 2010. So when an alternative, non-commercial, vastly more uplifting option emerged in April — to make the Old Royal High home to one of the UK’s top music schools — the proposal sent ripples of excitement around Scotland’s arts community. Imagine a performing arts institution reclaiming one of the finest and most visible buildings at the heart of Edinburgh: imagine what that, as opposed to a luxury hotel, would say about the moral compass of the city.

What it would say is that the legacy of the Scottish Enlightenment has not yet quite been forgotten. The Royal High opened on Regent Road in 1829, publicly funded (it cost a cool £34,000) to provide free and equal education to princes and paupers alike. “This building absolutely encapsulates what made Edinburgh a great Enlightenment city,” says the architect William Gray Muir. “It was built as a monument to the desire that all students should have a free top-class education at the heart of Edinburgh.” The location was conspicuous as a reaction to fee-paying schools emerging on the edges of the city: the private Edinburgh Academy had opened five years earlier down in the fashionable New Town, and the city fathers responded with this magnificent edifice right at the crossroads of Old and New Edinburgh.

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By the 1960s the school had outgrown its handsome home and was spilling over into pre-fab buildings off site. In 1968, classes finally relocated north-west to the purpose-built premises in Barnton that the Royal High still occupies today, and thus began decades of shameful neglect at Regent Road: half a century of non-use, misuse and near-use. As the interior decayed, the shell was variously occupied as a court house and a store cupboard. Currently it’s where some of the city’s music archive is kept. Notions of housing Scotland’s new parliament at Regent Road delayed the proper development of other plans and were eventually ditched by Donald Dewar in favour of the controversial Enric Miralles complex at Holyrood.

When Edinburgh Council finally bought the building back from the Scottish Government at beginning of the 21st century, it was still not clear what would ever become of it. The default option seemed dishearteningly inevitable, and in 2010 the developers Duddingston House Properties (DHP) won the right to take on a lease subject to planning consent for what they suggested would be a five-star ‘boutique gallery hotel’. “You can see that it is desirable for the council to find private money solutions to public problems,”says Gray Muir, “but that isn’t appropriate here. Hotels can go anywhere, but there is only one Royal High.”

The major problem is how to convert an A-listed space that is too good to meddle with but too specific for most purposes. The tight site and untouchable facade make the Old Royal High unworkable as a posh hotel without major revamping, and as Gray Muir explains, “it would be extremely difficult to make the building work as a commercial venture. There is a misperception that it’s huge because of the sculptural facade, but in reality the interior is not quite as roomy as it might appear. It would suit a small-ish school, but not much else.”

The DHP bid is fronted by architect Gareth Hoskins, whose designs are typically sleek and angular: previous projects include Shetland’s glassy new cinema and music venue Mareel, and the redevelopments of the National Museum of Scotland, the National Galleries and Aberdeen Art Gallery. Yet initial drawings for Regent Road that surfaced earlier this year were alarming, with two major wings bolted onto the sides of Hamilton’s original. Murray Grigor, former director of the Edinburgh International Film Festival, has called the proposal “a misappropriation of a sublime building” and likened the hotel plans to “something out of Vegas”.

Gray Muir is more measured in his rhetoric but no less concerned. “In isolation the plans might have been fine, but with this location and this heritage they made no sense. They were challenging images that created a sense of crisis.” And that crisis, he explains, us what rallied a group called the Royal High School Preservation Trust (RHSPT) to come up with an alternative. Perhaps the building can’t house a full-size state secondary, but what of a specialist music school?

St Mary’s Music School is currently housed in Coates Hall, a former theological college near Haymarket. The school has never been able to grow organically due to lack of space: there are currently around 80 pupils, including the choristers who sing daily services at St Mary’s Episcopal Cathedral, and instrumental performing facilities amount to a small chapel that seats an audience of 60-odd. The proposal set out by the RHSPT — of which Gray Muir is chair — would permanently relocate St Mary’s to Regent Road and would cost the city nothing because it is fully bankrolled by the Dunard Fund, an Edinburgh-based charity that supports causes to do with classical music, visual arts and architecture preservation. Peter Thierfeldt, a Dunard trustee, told me that the offer includes £1.3m to buy the building (an equivalent sum to the DHP lease), plus £10-£12m for immediate restoration and an ongoing maintenance fund. “It’s a thorough business plan,” he said. “It’s an astonishing offer.”

Needless to say, from the St Mary’s perspective the move would be a no-brainer. It would allow the school to expand to 100 pupils, including — crucially — an increased number of fee-paying foreign students. “It would clearly establish St Mary’s on an international platform,” headteacher Kenneth Taylor said, but he stressed the potential benefit not just for the school’s own pupils but for countless other music students in Edinburgh and around Scotland. “We are here to fulfil a need for young people who need a highly specialist music education. That’s not for everyone, but we do want to broaden our reach. More space would allow us to host open masterclasses, workshops and concerts. We would have a beautiful concert hall that we could use for public performances” — the central hall would seat an audience of 600-700 hundred — “and we could extend the Saturday morning classes we offer for Edinburgh school pupils. We don’t want to operate behind closed doors, but at the moment we just can’t invite the world into our tiny chapel.”

And from the city’s perspective? Due process requires the council to consider the DHP bid; if that is successful, the RHSPT team “will stand down,” Thierfeldt told me. “If not, we are ready and waiting in the wings.” But the vision of Edinburgh’s greatest eras did not hang on details of bureaucratic tendering, and the city has an clear opportunity here to honour its Enlightenment past. As Gray Muir sums up, “this building was erected as a moral statement about our city. Are we not capable of building on the legacy that has been left to us?”