Your son sounds a lot like mine. My DS did not like attention either, and it's hard to avoid when you're getting pulled out of class all the time. (Of course, once we switched him to a better fit HG school, he complained that he missed the pullouts!) That said, pullouts are pretty normal in early elem - for all kind of things (speech, etc.), so I don't think the other kids would notice much. But in your case, I agree with you that the 2nd/3rd sounds like a better option (and there might be some pullouts there too). We found that even with a one-year skip, a lot of differentiation and pullouts were still necessary (leading to the transfer to the HG school). I can't imagine how much more work it would have been for the 1st grade teacher to have attempted the differentiation.

Your school sounds like a wonderful flexible school, and hopefully they will agree with you and support your plan. Do you know the 2nd/3rd grade teacher and if they would be more supportive academically than the last teacher? I am a big believer that if a kid is appropriately placed academically, the social piece falls into place, and I'm sorry to hear that she ignored many academic needs.