Do you still think he is gifted? Yes, he has difficulty with reading and such, but how do you feel he does in general? Does he understand complex concepts when explained to him aloud or seen through TV, for example? How is his expressive vocabulary? Do you see a big difference in what he can show he knows orallly about a certain topic versus in writing?
There are a couple of things. IQ tests can be wrong. We had DD tested at 4.10, and she came out in the gifted range. However, we felt it was not really a good depiction of her true abilities (while nothing went horribly wrong the test day, it was far from ideal). We just had her retested (6.7) and are awaiting the full results; but I was able to get a peek, and she tested MUCH higher than before.
Now, he could very well be "just" bright. My 2 brothers and I are gifted, probably MG, maybe HG. Our youngest sister, I am pretty sure is not. She does have dyslexia and maybe other undiagnosed LD. However, I don't think that she is 2E (gifted with a LD). My dad, for example, also probably has dyslexia/dysgraphia; however, he is clearly gifted.
ALL of what you describe sounds strongly like dyslexia to me. Given that he is bright enough (and possibly gifted), he has been able to keep up/be slightly ahead. However, as you mention, he was to work for it. I suggest you take a look at the "Mislabeled Child" book by the Eide's. Also, take a look at their description of Stealth Dyslexia (how dyslexia combined with giftedness can look like).
http://mislabeledchild.com/html/Library/DyslexiaReading/Stealth_dyslexia.htm
