It sounds like a misunderstanding - the teacher expected the students to list the words in order, your ds didn't know he was supposed to do the words on every line or whatever, he ran out of room, and he came up with a solution that he didn't realize wasn't acceptable. I'd talk to the teacher if you can catch her in person and explain it that way, and let her decide if she's willing to change his grade. I wouldn't argue if she won't on this, it's one spelling test - but I would explain to my ds what to do next time.
polarbear