Lmom,
I see what you are saying about handwriting for a three year old. At that age it wouldn't be surprising that the fine motor/dexterity wouldn't be where it needs to be for proper handwriting.
Some kids would be extremely frustrated by this, but some might respond positively.
Are they teaching him how to write, or is he already writing and they just don't like the way it looks?
They didn't like the handwriting of my 5 year old but he got much better and even the teacher mentioned that his writing is getting good. That said it's hard for him to put everything he wants to on the paper. It just takes too long. At home he used to type on the computer and it was much easier and faster for him.
My 3 year old is taught how to write. I don't think it bothers him too much but he cannot really do it. He can write some of the easy letters and numbers but some are really hard for him like 5 or 8. If you ask me if they waited till he is 4 the result would be the same. They mentioned that they don't want to move him in math till he learns to write the numbers but that none of the 3 year olds can write. Doh. Give him wooden numbers or let him circle the correct answer but let him do the more interesting math or let him play instead. He must be sick and tired of the counting.
I must admit that I mostly advocate for my older one and my younger one is getting a short stick on this. It's kind of one thing at a time, you know.