Our school starts G&T math and reading in 3rd and 4th grades, too, utilizing various ability and achievement tests. Subject differentiation that takes place before this is based on achievement scores, and possibly teacher feedback.
Honestly, in our schools, what happens is - differentiation goes from being very achievement-based and quiet in the younger grades (the school at times seems almost secretive about where they are placing a child - almost a "we know best" policy), to being very public (criteria for G&T is publicly available) after 3rd grade. Quite honestly, the programming itself isn't all that different. DD has always in the "highest" subject groups - since differentiation by subject started, she simply is now "formally identified."
I will defer to the other experts here about the stability of the ability/IQ data, but in our case - the early achievement data was extremely consistent with the eventual ability/IQ data in 3rd grade. We wish the schools offered more for the younger students.
