In answer to your main question "Does this seem developmentally appropriate for a first grader?" my answer is yes. My DS6 is in 1st grade, and what your DS wrote looks like 1st grade writing when there's no teacher prompting them to remember their capitalization and grammar. On its own, I don't think your DS's writing looks like a learning disability at all. However, similar to other posters, if it's out of context compared to your DS's other abilities, perhaps it's indicating something.
My DS6, and most of his classmates, would likely write something very similar to what your son wrote. DS6 still spells phonetically, although is starting to remember more of his recently learned phonics rules and is starting to spell a little better.
The first grade teachers at our school request that parents don't correct spelling on homework as long as the children are spelling phonetically. SRCOL is a phonetic spelling for circle, especially if the "R" family phonics rules are new to your DS or haven't been taught yet (er, ir, ur and or, ar); same with when "C" makes the k vs s sound. May be plenty easy to read, but not so easy to recreate in one's head from scratch.
We suspect some kind of LD with our DS6 because his reading abilities lag so far behind his other abilities. He's reading "above level" for his grade level, but it doesn't match the fact that the rest of his abilities are 1 to 2 years ahead. We did dyslexia testing on Monday, and have no official results, but the tester thinks it's likely not dyslexia and is rather related to his lower processing speed (which we know from IQ testing) and possibly working memory. My point in saying this that, even if your DS's writing sample is developmentally appropriate for 1st grade, it may not be developmentally appropriate for *him.* If your parent gut is telling you something's up, keep exploring it.
