Sharon,
You have almost identical situation (the test results) as ours. Mine are girls age 7 & 9. DD9 will be in 5th grade coming school year and DD7 will be in 3rd. They skipped kinder when they started school. DD9 is doing well in her class but not outstanding but my DD7 is way beyond her peers (some are 2 yrs older in her class). The school does not do subject acceleration and (after discussion with CTY result in hand) the principal suggested to skip another grade for DD7. We decided against it on following grounds:
1) we are not thinking of sending her to college at young age so why rush
2) she may miss out on valedictorian, competitions, etc...(as you said)
3) even though she is mature for her age, she may not handle peer pressure well (especially in middle school)
4) to preserve my DD9 psyche
We are supplementing after school. They would bring some books to read after they finish their works. DD7 usually finish real quick and sometimes help out her friends (with teacher permission) and she enjoyed that. She likes the fact that she is doing 2-3 grades above what other kids in the class are doing. That gives her incentive/motivation to learn ahead.
So far, it is still working. I think there is no clear blueprint for our kids' success. We have to adjust on their abilities and consider their emotional and social developments (rather quickly).
I hope you find what works best for you.
