I guess the thing that pops out at me is "same teacher for 2 more years." From what you've described, this doesn't sound like a good thing. I guess if I were you, I'd get the ball rolling on the 4/5/6 classroom if you think that will be a better fit (sounds like it will). If your DD is without academic peers in this classroom, and there is no support to differentiate for her, things will be very hard.
Also, it couldn't hurt to look at all the possible options if there are other school choices nearby that may be better.
I'm sorry you're going through this.
