I can't say I have any answers, but I share your concerns. My son isn't quiet as advanced as yours, but he taught himself to read a little before three and is now reading at about a second grade level (at 3 years 10 months). I find myself making excuses for my son's reading ("we didn't push him," "I didn't use Hooked on Phonics or Your Baby Can Read," etc.)
I've done some reading around early readers. What I've found is that some early readers end up being labeled "gifted" (but not all) and not all gifted kids are early readers. For early readers, often times they do not got the support they need in school to continue to grow. (I have a reference, but I can't find it at the moment. I'll post again when I find it!) Gifted Child Today had an article in 2008 that addresses similar issues called "Reading Instruction with Gifted and Talented Readers: A Series of Unfortunate Events or a Sequence of Auspicious Results" that addresses similar issues.
As for schooling, we're moving our son from a traditional age-graded preschool to a multi-age Montesori preschool because the "letter of the day" format for reading (B says "b." Let's list the words that begin with b.) was not supporting him. We also found he was beyond his same-age peers in mathematics.
Some posters have noted that their gifted children have "outgrown" the Montessori program quickly, but we'll cross that bridge when we come to it.
As for schooling, we live in a upper-middle class community where their is a lot of emphasis on doing well in school. We are planning on having our child tested before kindergarten so we will have some evidence to bring to discuss an appropriate placement. I'm not sure grade skipping will be an option, but we may advocate that he be allowed to do reading and/or math with another grade, should it be warranted. I think the formal test results will be necessary to combat the "all parents think their child is gifted" mentality.
I think a three year old can definitely have anxieties. Our son went through a period around age 3 1/2 when he was very anxious about not being at home. While stopping preschool was not an option, we made a concerted effort to pull back on both the extra-curriculars and the amount of time we were away from home. Even the "fun" things like the children's museum seemed to overwhelm him. (I think he has some sensory integration things going on, so it makes sense.)
Hope this helps...and good luck!
Kathie
