Hmm. He isn't really young for grade and he's academically ready for second grade already... and you say he does better with older children. Oh, and he also likes sitting at desks doing schoolwork? What social or academic issues is the principal concerned with, exactly? If they were looking at him as an end-of-year first grader (let's say they could forgot he has just completed K), would they question him going on to second grade?
I'm going to admit to a certain cynicism, but it is possible that they are indeed trying to push you off the idea.
