I wouldn't stress over the handwriting - as the parent of a dysgraphic child, I have two pieces of advice re handwriting: first, even if his handwriting is hugely behind grade level, you don't want to hold him back, he still needs to be where his *brain* is ready to be. Second, I'm guessing that if you looked around, you might find the quality of handwriting one grade level up really isn't all that great
We actually had a bit of a tough time arguing that our dysgraphic ds with illegible handwriting had any kind of a challenge in 2nd/3rd grade because, well, the writing samples from most of the neurotypical kids weren't all that legible either at that point in time
Re is a grade skip the right thing at this time, I like Cricket's advice. I'd also add that the decision is going to be somewhat school dependent too - we've found that once we hit middle school we were able to find a school that met our ds' needs and allowed him to stay at grade level, which is what our ds wanted. Elementary school wasn't perfect (or even "great" but I don't think that it hurt our ds in the long term to not grade-skip). It was also helpful to look at decisions like this once our ds was old enough that he could give us his input.
That said, if we'd felt it was necessary to grade-skip when he was younger, we would have done it with no hesitations.
Best wishes,
polarbear
