I have been told by my boss that I must do such an exam.

I had thought that with 18 years teaching experience in Thailand I'd be exempt from such a farcical thing. However, they say because I worked in language schools pre 2003 I can't get it.

What's it all about? No one at my school has passed! Would it be possible to live here for half of one's life and fail a culture exam?

Any insight greatly appreciated.

As I understand things:

Culture course may be compulsory but it's not a test. 3 days attendance only.

The TL exams aren't compulsory either. The alternatives to the exam are take a 1-year TCT accredited post graduate training course in Bangkok or ask your school director to write to the TCT for a waiver. The waivers seem to be automatic. The waiver is by far the best possible solution for you and your school.