I'm sorry you are feeling discouraged. Remember that his education is a long-term project. Sometimes (even often!) there will be short-term setbacks, but that doesn't mean there is no hope for future advocacy attempts or better classroom placements.

On the EOY grade 5 math test: remember that you are not asking for him to be advanced to grade 6 math right now. He received instruction in grade 5 math for three-plus months, so it would be reasonable to unit-test him up through the point where the grade 5 math group is working at this moment, to be sure that he could walk in without gaps. No one expects students placed in grade 5 math to have already mastered all of the curriculum. So that is a possible point of pushback, should your family decide to keep going with this.

And, as your husband appears to realize, any product that has your DC's work generated on it falls within FERPA, which means you have a right to request a copy of it, or an opportunity to inspect it thoroughly (in the case of assessments with intellectual property protections), or to request that a qualified professional of your choice have a copy of it to review with you (in the case of, for instance, B- and C-level instruments like IQ and individual achievement tests).
...pronounced like the long vowel and first letter of the alphabet...