So in this case, my alarm bells mostly go off on behalf of the district's interests. If I were in their place, I would be very concerned about opening oneself up to compliance issues, as this is taking an officially-general ed student out of the general setting (hence losing time on learning and access to the general education curriculum, and illegally putting them in a separate setting for an undocumented pull-out related service).
There is actually a legal, official way to do this, which is to write a 504 for accommodations and related service provision. They would, however, have to acknowledge the existence of an educationally-relevant disability. You might ask for clarification; are they proposing a 504 for related services?
