I would ask about when his reading level was last assessed and get some info on the type of assessment used and how he performed. It seems pretty common for kids to be held back due to "comprehension" because they aren't giving the assessor exactly what they're looking for - e.g., he could comprehend the books perfectly but need tips on how to answer the questions to score points.

Angie, I don't think it would be at all insulting to donate books to the classroom - I'm sure the teacher would appreciate it.