I'm so sorry your DS (and you) are having this problem.
From your post, though, and maybe reading inaccurately between the lines just a little, it sounds like maybe the best option would be to move immediately to #1 and get on the waitlist for #2, hopefully for next year, if you can do that. Our DD had a bad year in 3rd grade with a very unsupportive teacher (at a private school) and we still all talk about how bad it was and how maybe we (the parents) should have been pushier rather than trying to be polite and believe the teacher's lukewarm reassurances. That doesn't matter to you, of course, but if you are bothered and your kid is bothered you should move.
I am sure you are very good at making decisions at work but maybe it's harder when it's your own family/ kid?? My Dad had taught me a long time ago to make a list of pros and cons for each decision (moving vs. not, moving to #1 or #2) that maybe would help you think through it more thoroughly.
Whatever you decide, best of luck! I really hope you find a better situation.
