Hi puffin, she is at the end of after 3 years of school for reading and 2 years for math. I think they prob wouldn't have gone with it except she was a non reader on day 1 ( may) and has done 3 years work in 2 terms so they can see how fast she is without being able to claim I coached her at home before school. It helps tremendously that DD is an old soul and just looks out of place with the kids around her and spends every lunch with the older kids. It's a small school so I think they are able to notice it more.
Besides which like your ds she only just missed the cut off to be classed as year 1 so I think she really is just going to where she should be anyway. I think the real problem will be when it clicks that she'll only need a month or2 in year 2 before being ready for year 3 - she doesn't skip stuff just learns it fast so she'll still need to do the work.