The cutting is a fine motor skill as well so it will help him to do it. Kumon makes lots of variations of cut out and paste activity books. Once he gets the hang of it you can get him the more sophisticated cutouts from Dover they have themes such as historical clothing and Shakespeare.
I also suggest getting him an OT eval and working on his fine motor starting now and through the summer so that he is closer to the average range in fine motor in the fall. If you address that issue it will be easier for the school to agree to a skip. Skipping him without the fine motor skills could make the situation worse, but I think if his fine motor is as bad as you say, and he goes through OT, and you follow through with home exercises, he will improve unless it is another problem altogether. On the other hand, letter reversals are still normal for a K student regardless of how smart they are.
You don't need to do a ton of exercises a day at home, but if you pick one or two to work on everyday for 15 minutes there could be improvement. Some things you can do before getting the evaluation are: turn pennies, Pop the Pirate game, cutting, folding (origami) and beading. Therapists often use Handwriting Without Tears. First figure out which letters he does not form correctly by watching him write the lower case alphabet then choose one or two of those letters per week to trace in a rice tray and then switch to a blunt pencil in the tray when he has the fluid movement and order, and then move to paper. It helps to say something like "a" make a circle, close it, slide down the pole. You can make them up yourself.
I also helped the situation by reminding my child to make sure to write clearly and carefully on papers for the teacher because it will help the teacher know what you can do if she or he can read it.
