Thanks for your reply, W'sMama. I would love to take my son out of class, but what if his next teacher is as bad, or worse? I feel he needs to learn to deal with difficult people.

I have found an article that may help others in a similar situation:

http://www.davidsongifted.org/db/Articles_id_10241.aspx

I am collecting articles/resources to show my son's principal the next time she says the whole "your-son-can't-grade-skip-because-of-social-issues" nonsense. Although I think the principal is getting fed bad information.