I'd advocate as Grinity suggests (letting it go), but with one very important caveat.
Make very sure that any coursework "required" for high school graduation by your state is going to recieve credit on a high school transcript.
That won't be the middle school principal's problem, of course, if it happens in five years that your child has to take "algebra I" again because the state won't allow a high school diploma without the course.
This may or may not matter-- my advice is simply to check into it at the state level before deciding to let it go or not, because the only thing more nightmarish than the current scenario would be to have to REPEAT a course (that the student aced in 6th grade)... as a 12th grader.
Our household rule has become; "If it's a high school course with high school classmates, it goes on THIS student's high school transcript same as all of the other students in that class, thank you very much."
One more helpful tip; when an administrator says something completely bizarre, it is sometimes helpful to ask, "Can you show me that in writing?"
(Phrased as tactfully as possible, of course.)
"Can I get a copy of that for my own records?"
"Is that on the school/district/state/public website?"
"Can you repeat that? I want to make sure that I have that down correctly in my notes."
