For our DS, he caught up in academics (as evidenced by test scores/grades) right away after the skip, but he still hasn't caught up in handwriting/output. That isn't an issue at his current school. It took him about a year to feel better about pys ed, but he's not particularly athletic to begin with. He found that he can run just as fast as most of the kids, now, so even if he can't do a lot of the other physical stuff as well as the really athletic kids, he feels better knowing that he can hang with them in running.
Re: what you said about the reading group. "His teacher was saying maybe she needs to highlight that if he works harder he could move up to the group his friends are in." This seems almost like a teacher who doesn't get GT to me. He has to slog along and perform under his level to prove that he should be doing advanced stuff. Has he ever been in the high group with this teacher (and then ended up getting moved down for various reasons)? If you think he is not being challenged in reading, I'd try to meet with the teacher to find out the specifics about why he's placed where he is. She may have valid reasons, or, like someone else said, maybe she's not seeing his GTness.
