I've experienced this battle. We have a school system with a public mandate to provide for gifted children, and they have a program, say all the right things, etc. We enrolled our DD, and we were presented with reams of evidence of how it was all wrong for her. We talked to the school, where we encountered a stone wall of institutional intractability. We probed for cracks in the mortar for some time, before we came to the point where we realized that further argument was going to accomplish nothing, and pretty much our only solution was to leave.
My answer to the question of whether you should keep them enrolled is a definite no. National awards or not, your institution is engaged in showing off how deeply they just don't get it.
It's great that you have other options. Now that you're informed with experience, you won't be derailed when someone insists the boys be enrolled in pre-K. I would present my case to any prospective schools in this way: "My boys want to come to school to learn. They have been assessed on the WJ3 at the third grade level. Any solution you have to offer which does not involve them working at the third grade level is unacceptable."
