Does your DS read well beyond grade level? If so, I can certainly see why you'd be upset! I know I'd be feeling rather disgruntled with such a ceremony if my DS were in your DS's place. It seems as if all students in that class who meet that standard should be acknowledged for it (since it seems that this is what they do at your son's school). I'd probably ask the teacher about it because I'd want to know why DS hadn't also been included.

As a side note, is reading 600 words really something to be excited about for an average second grader? That seems like rather a low number for a public awards ceremony. Of course, I also think it's a bit silly for a school to count the number of words someone can read into the multiple hundreds! By that point, how can you really count them anyway?