I agree with Kai. An honors section would definitely be a better peer group and likely pace of instruction. But even college prep alg II would be better than the alternative you expect. FWIW, that was exactly how my 7th grade year opened---sitting in the back of the classroom working on "extension" math until my parents persuaded them to let me try out algebra I. A couple of weeks later, the algebra I teacher recommended sending me to algebra II. I can attest to the substantial improvement in my math experience after the move!
