Appropriate challenges should not be presented as an award or something that can be taken away. What if it was: "Your kid was acting up; so, we stopped teaching him reading." Or "your child doesn't seem to appreciate math; so, we are going to make him sit out of math class."
Frustration can lead to a lot of out of character behaviors. Our face palm was vision; with handwriting and unexpected shifts in apparent reading comprehension; it makes me think a good developmental optometric check-up is not a bad idea.
Is your son aware of his behavior and offer any explanations?