Who should be the king/queen of England?

I think the problem lies in the "should" of your question - by what criteria? And Richard III actually usurped the throne from his nephews - the "Princes in the Tower" - whether he had them murdered or not, so can hardly be "the last line legitimate" monarch, as you state.

IF you believe in a divinely-ordained right of succession, whereby the Crown passes to the eldest son, or daughter in default of sons, then no, Elizabeth II is almost certainly not the "rightful" sovereign. But being the legitimate heir to a king/queen does not guarantee fitness for the office, and there have always been brothers/uncles/cousins in the wings thinking "I could do a better job!" - and often did!

Whilst the current line of succession was largely set in stone by the Act of Settlement, settling it on the Electress Sophia and her Protestant successors, this was a continuation of the principle set by the 1688 Revolution, whereby two "legitimate" claimants - James II and his infant son - were passed over for candidates more acceptable to Parliament. Mary II, with a father and brother living, had a weak claim to the throne; her husband William had an even weaker one, but Parliament implicitly assumed the right to choose the sovereign, and that only conditionally upon their acceptance of the Bill of Rights 1689. From a legitimacy point of view, it is interesting that many Tories wanted to offer the Crown to Mary alone, as the next heir, if her brother was illegitimate; William had no intention of being Prince Consort, and Mary herself, as a dutiful wife, refused to accept the Crown for herself alone. But it marks a seismic shift in the balance of power between Crown and Parliament; henceforth, no sovereign could rule without the support of Parliament. A more modern example of this is shown by Edward VIII/the Duke of Windsor, when his determination to marry a (foreign) double divorcée was unacceptable to the politicians of the day, and he was forced to abdicate.

So, I am sorry, but in a sense I find the question meaningless - I suppose the only answer is - the person who people and Parliament accept which is, at present, Elizabeth II.

The question is based on the premise that the monarch of England is simply determined by applying a set of defined rules - i.e. legitimate, male line succession. As argued by others above, this has always in practice been combined with a degree of pragmatism (i.e. who is the best ruler) and even an element of democracy (as shown by the Act of Settlement) not to mention brute force. It's also highly debateable whether 1066 is the most appropriate starting point (why not King Alfred the Great?). However, ignoring those elements, I've had a go at applying the rules of succession to William the Conqueror's descendents below.

The somewhat surprising conclusion is notwithstanding the various immediate breaks in succession, the lines tend back to the line that had the throne, largely due to judicious use of marriage, imprisonment and execution! The only exception is the Jacobite claim, which is technically with Franz, Duke of Bavaria, although this line has never claimed the throne of England.

Here is the full list, with the dates that the people would have technically claimed the throne:

William the Conqueror - 1066-1087

Robert Curthose of Normandy - 1087-1134

Henry Beauclerc - 1134-1135

Matilda of England - 1135-1167

Henry Plantagenet - 1167-1189

Richard the Lionheart - 1189-1199

Arthur of Brittany - 1199-1202

Eleanor of Brittany - 1202-1241

Henry of Winchester (III of England) - 1241-1272

Edward Longshanks (I of England) - 1272-1307

Edward of Caernarfon (II of England) - 1307-1327

Edward III - 1327-1377

Richard II - 1377-1400

Edmund Mortimer - 1400-1425

Richard of York - 1425-1460

Edward IV - 1460-1483

Edward V - 1483-1483 (assuming we ignore the fact that parliament declared him illegitimate?)

Elizabeth of York - 1483-1503

Henry VIII - 1503-1547

Edward VI - 1547-1553

Mary I - 1553-1558

Elizabeth I - 1558-1603

James I - 1603-1625

Charles I - 1625-1649

Charles II - 1649-1685

James II - 1685-1701

For the following line, see http://en.wikipedia.org/wiki/Jacobite_succession

James Stuart (Old Pretender) - 1701-1766

Bonnie Prince Charlie - 1766-1788

Henry Benedict Stuart - 1788-1807

Charles Emmanuel IV of Sardinia - 1807-1819

Victor Emmanuel I of Sardinia - 1819-1824

Maria Beatrice of Savoy - 1824-1840

Francis V Duke of Modena - 1840-1875

Maria Theresia of Austria-Este - 1875-1919

Rupprecht of Bavaria - 1919-1955

Albreacht of Bavaria - 1955-1996

Franz Duke of Bavaria - 1996-present.

If you accept that the Parliament of the United Kingdom currently has "sovereign and uncontrollable authority in making, confirming, enlarging, restraining, abrogating, repealing, reviving, and expounding of laws, concerning matters of all possible denominations, ecclesiastical, or temporal, civil, military, maritime, or criminal ... it can, in short, do every thing that is not naturally impossible", then I point you to the Act of Settlement 1701, which states that succession to the British throne will pass to the oldest surviving Protestant descendant of the Electress Sophia of Hanover (1630-1714).

That's the interpretation I go by, since I like the idea of Parliament being the ultimate source of sovereignty, picking monarchs and heads of state at its whim.