For our kiddos, it seems like one or two skips with further subject acceleration work well. My 9 YO son was pretty happy in half day K and didn't "fight" sitting through things he already knew because he was only there for 2 1/2 hours, with lots of play time and recess etc. In first grade he became miserable (and made his teacher miserable because he was always bugging the other kids when he had nothing to do all day) and we had him tested. At the beginning of the next year, he went to 3rd and to the middle school for math. This year he went to 4th and 8th grade for algebra, science, reading, and computers. In Sept., he will do 5th and 3-4 high school classes. He's happy with the mix of academic challenge and time with age peers, although after 5th he's probably going to make the jump to full time high school.
My 5 YO daughter is much more content to sit quietly, behave, and go with the flow. She's spent all year "learning" how to count and repeat letter sounds even though she's reading and doing math at at least a 3-4th grade level. We're having her tested soon, so we're not quite sure yet how gifted she is or how much acceleration she will need. Right now the plan is to send her to 3rd grade for at least reading and math - we don't know yet if we'll also have her skip a whole grade or not.
For us, in class differentiation never really happened - yes, our son got extra worksheets (no fun!) and was allowed to read, but he wasn't actually taught anything new. Skipping way ahead in his areas of interest and still doing things like lunch, recess, gym etc. with age peers seemed to work well for him.
PS -Delbows - my son can't keep up with handwriting either. When he went from 1st to 6th for math, he had a "note buddy" who took notes on a carbonized notebook and gave him a copy. Now, he still either has a "note buddy" or types.
