My HG/dyslexic boy had the exact situation and I think you're doing the right thing by listening to his feelings, at least for now.
We wanted to move our son to a private school in 2nd grade, which promised to more fully meet his needs and provide intense intervention for his dyslexia. But the neighborhood friend group was too strong a pull. My son would have absolutely hated leaving his friends in elementary school-- and it was really torturous to us wondering whether his emotional health or educational needs were more important. We ended up compromising with him and let him stay in his pretty good elementary school with his buddies and in exchange, he had to be privately tutored 2-3 times a week for 3 years.
He's a 7th grader now and I have no doubt we made the right decision. Private tutoring was better than private school and his teachers now are shocked to find out he has dyslexia. But we did force him to move to a different middle school than most of his friends, because we felt the school he's currently attending better meets his needs. He's old enough to understand now, that he can be friends with the neighborhood kids after school and that he doesn't have to be in the same classroom as them.
