I think there are some good things in the current 504 but it needs some serious tweaking. You just never think that people will do the wrong/unsupportive/cruel thing. Or at least I don't...
Live and learn. Some have found that using precise language and being focused on facts (although detractors may term it pedantic), may create the most easily understood 504s, not subject to re-interpretation which may change intent.
These resources share useful information for creating a 504.
Regarding late work being marked down, you may wish to check the class syllabus, parent/student handbook, and/or school policy and practice statements to see if there were statements to notify about this proactively and manage expectations. This could potentially be modified by your child's 504 plan.
You may wish to document the encounter with the principal, including a list of the e-mails which you shared with him. It is not unheard of for an administrator to appear to flip-flop and become rather protective of the system (possibly after the legal department is consulted). You may wish to ask him about such things as: next steps, when he will get back to you after reviewing the circumstances to-date, etc. You may wish to state up-front that your goal is to ensure your child can continue in the program.
