Seeing that response from the principal, they may think he is taking on too much and nondisabled students would have the same issues.
When you had your 504 meeting, did they accept that he has disabilities affecting a major life activity and then determine that he has full access to the curriculum? Or did they deny the disability? Not finishing a test is "new information" for sure.
And if you are not successful in pursuing this, there are other avenues to force the issue--- mostly to take a closer look at what the school is doing. In my area, we have advocacy groups that provide free advocacy, and there are paid advocates and lawyers. Any of those would help to gather data for you if you don't already have a ton. You need data to counter the school system data.
There are also your due process rights. And in many states, there's a process to accept and investigate complaints for both Special Education and 504s. But before I would do that, I'd gather a lot of data-- otherwise, your school system looks like they followed the law (doing an assessment, gathering data on educational impact and holding meetings). You will need to show they missed something
