For my DS, they did it right before the first 9 weeks was over... his K teacher actually had a "party" for him, as a congrats. The kids in his K class understood what was going on... I'm not exactly sure how, but she explained it. But the kids also knew he could read at an entirely different level than they could, etc...
DS went to K on a Friday in the morning, and then in the afternoon he went to his new 1st grade class. On the following Monday, he reported straight to the first grade class.
Your DS sounds similar to mind, as far as being the "popular" K student. What I love is that DS has two boys from K that wait for him near the 1st grade hall in the mornings for breakfast - he gets to eat with whomever he wants. And he's transitioned into the 1st socially quite well...
Anyway, my point is that I do not know what to tell you to tell the students, or what to say to the school, but sometimes the simple "because" is all you need.
Good luck & congrats!
