kimck-no disrespect, truly: Our principal uses that comment as well. In fact, another parent and I have compared notes, he pretty much has a set speech that he uses with parents of gifted kids.
I still believe it's used as an attempt to manage parent's expectations. It's not personal. Think of the school in terms of a business. The principal is the C.E.O. who has to make decisions on how to allocate resources. It wouldn't be possible or even appropriate for that principal to be as vested in your individual's child education as you are. His job is to take care of all the students. In fact, I will go so far as to say his/her main responsibility is the bottom third, especially if they aren't meeting minimum standards. However, a great principal will attempt to meet all the needs of different students and I see our principal attempting to do this. There are things the school can do. Things they can't. There are also things they can do and are probably not inclined to. It's our job as parent of the child to figure it out. Think of these meetings as a chess match.

On that point, Dottie---You Go Girl!!!!!!
Good luck, stay strong and do not allow them to manage you. From reading posts it appears that you know the laws involved and probably have a pretty good feel for what they can and cannot do.
I read a previous post where someone implied that you do not have to agree to anything at the meeting and I think that is key.
Looking forward to some good news!!!!!

Incog