Yes, I think they've fallen into this as a way of placating parents of students already in the program as they expand the GT pool. This is what the district web site says about it:
Verbal Domain Grouping will provide gifted students with opportunities to engage in intellectually stimulating endeavors with peers who are equally capable of learning at comparable levels. Purposeful grouping of students has been shown to increase intellectual engagement and qualitatively affect measurable academic growth. Homerooms will provide students opportunities to explore content areas with depth, complexity, and pacing suited to their intellectual abilities. The CogAT Verbal domain, our best indicator of reading and comprehension potential, will be used to assign students to homerooms for literacy, social studies and science, since success in these subjects is most closely correlated with verbal ability. Student service in the math domain will be determined by academic performance on placement tests. Students will then be assigned to math classrooms, at appropriate levels, with opportunities for content and process differentiation.
I'm pretty sure they are not administering it way out of level, although without a score report, who knows what they did? I know that they tested, that my DD8 said it was "pretty easy," and what the district says about their plans above. I don't know who the teachers will be in her new school (they are moving half the kids, and they claim that half the teachers will move, but I've heard from other sources that that's not true), who would be a good teacher for her, or what's going to happen. If they stratified by observed achievement, that would probably be worse for DD, since she has been seriously underachieving this year because of the behavioral issues.
She has two neuropsych appointments in July. We'll see what we learn from those.