Cym,
I admit that I haven't read the whole thread, so this might be "after the fact". I think you can't win and you have to look at the "least-worst" option. My sister was held back a year and we ended up in the same grade from 5th on up. The teachers wanted to skip me ahead a year. I was top of the class; she was bottom. My parents did not skip me because they were afraid of how she'd feel. From 5th - 8th, we were always together because we were at a very small school where there was only one class of each grade. She hated it. I hated it. I was bored and often became the teacher's helper or the "tutor". This was bad for me socially and enraged my sister.
My mom says now she should have gone ahead and put my forward. I was always picked on for being smart (even by the teachers). My sister turned to drugs, alcohol, sex to be "different" from me. She did graduate high school, but barely, and only with my help on a last exam (not cheating, cramming). We are in our 40s and both still carry emotional scars from it.
You are in a "damned if you do, damned if you don't" situation. I guess what I'm saying is make your best gut decision and mitigate the damages (maybe give the older one a special privelege?). At some point, in real life, the older will have to face whatever it is that concerns him about this (and, I agree, it has more to do with little brother being in the same class). Perhaps it is best to let him deal with it now with his brother than to shield him from it and he has to go through it at 26 at a real job where the consequences are much higher.
It's a tough spot. I hope you get to a point of peace within yourself about it.
