If the school is as flexible and great about trying to serve him as they sound, I'd say keep trying to make it work. If it seems like it's going to be a problem, past history would indicate that they'll work with you to give him what he needs.
If the both of you want to homeschool, that's a different story. But if you both want him in school, then I think in this case homeschooling just doesn't seem to be a necessity right now. Maybe it will be again at some point. But I think that if he's really not challenged, that school is going to work their tails off to give him more. I sure wouldn't throw that away without more conversation.
(Not that that's what you were planning to do, of course! LOL! I'm just sayin'...this doesn't sound serious to me yet. More like buyer's remorse than anything else. I think you're in a good place, and you have plenty of options. See how things go.)
OTOH, it might be a good time to start thinking about laying the foundations for more challenge eventually with both DS and the principal and teacher. Keep those lines of communication humming!
