Hey, LDS here. Yeah, January/February birthdays are tough with the age system -- my daughter is a January birthday and may have the same problems. I've also taught Sunday School for varying Primary ages.
It sounds like you are not from the US? Where are you from? (I'm from the US, so don't know how much of this will be applicable to you.)
First, I am shocked that there has been a suggestion to take him home. I have never seen this in my experience with the LDS church -- even with the very-disruptive ADHD child, even with the severely autistic child (although arrangements were made to deal with that particular case). I agree with your intuition that he might not ever go back if he stops going.
Does he see the other kids on a regular basis for playdates, church activities, etc. in situations where he will NOT be acting up? If he has a strong social connection and peer group to share Sunday School with, perhaps that can motivate him not to be "naughty." This isn't always going to work (for example, it doesn't always work with the ADHD child I mentioned above), but it does provide a foundation and can, I think, ameliorate some of the worse conduct.
I also am surprised that he's been bored for two years straight. Our Primary focuses a lot on art projects and games to help the kids digest the lessons in a more fun way. Does your Primary know about sugardoodle.net? BEST WEBSITE EVER. If the teachers don't use this website, they should.
Another solution is to call you or your spouse to be the Primary teacher for that particular year, assuming he's more likely to listen to you than another adult. (This happened to me one year when MY kid was the kid who was acting up.) At the very least, you can tailor the lessons a little more to teach him things he doesn't already know! Or work with the teacher to give her/him ideas as to what might motivate your child. I can tell you, as a Primary teacher who's been in that situation, that I would be abjectly grateful for any guidance a parent could give me with a difficult child.
Another solution we have used in my ward is to call the parent as an "auxiliary teacher," or for the parent to unofficially be available to pull the child out of class when he gets too disruptive. This happened for a while with one class I was teaching (5-year-olds) -- the mom had to stop by every week and pull her kid out. After a couple of months of this he settled down.
Anyway, without knowing more details (do you get along with the teacher? What does s/he say? Does your child behave in Sacrament and Primary?) I can't give more specific solutions, but hopefully these are helpful.
