Originally Posted by TripleB
what options do you feel they may come up with?
They may present a subset of the ideas listed in these articles from the Davidson Database:
Basic educational options for gifted students in schools
Types of Acceleration

Meanwhile, be aware of program buzzwords. You may wish to ask gently probing questions to determine "who, what, where, when, why, and how" of any proposals presented.

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what are the positives and negatives of moving him up to 3rd grade?
The Iowa Acceleration Scale (IAS) covers this well. Hoagies has a page on the IAS, and Institute for Research and Policy on Acceleration (IRPA) has information on both IAS and "A Nation Deceived".

There is also a current thread on "Grade skipping trade offs" which may be of interest.

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My wife and I are so proud of him but at the same time are seriously worried because, by our own admission, are neither one near as smart as he is and worry that we may actually impede his potential
This may be a common concern, however bear in mind that few (if any) people have the ideal conditions to reach their full potential, as there are always tradeoffs, and "opportunity cost". IMO, as long as parents are supportive and encouraging (not communicating that the child ought not to exceed the parents), and as long as the child is respectful despite surpassing the parents in knowledge and achievement, this can work out wonderfully.