Caveat: What follows is only helpful if you're living in an area where FAPE (free, appropriate public education) is a right guaranteed by legislation. Here in the US, it's a term originally coined in legislation for students with learning disabilities, and some states have expanded the definition to include all students, and specifically gifted ones, through additional legislation. I highly recommend you do some research on your national/state/local laws in this area, as it can be invaluable in advocating.
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I would express sympathy with the teacher, who is expected to go above and beyond for this one student. However, on the statement of whether he's grateful, I'd be tempted to ask: Are your other students expected to be grateful when you provide them with appropriate work? Doesn't he have the same right to a free and appropriate public education as everyone else in the class?
Then I'd use that as a jumping off point about how in-class differentiation is not an appropriate solution, as it places an undue burden on the teacher, does not meet my child's needs, which causes him to act out and disrupt the class for the other students. Everybody loses. The result is predictable and preventable.
And finally, if the only thing the school is offering that approximates "appropriate" is his brief, weekly pull-out, withholding it as a punishment is every bit as much a violation of his rights as refusing to serve him lunch or tying him down to his chair. While I agree that the hat-stealing incident needs to result in immediate and meaningful consequences, the school needs to find other means which do not violate his rights.
