My dh and I had this exact conversation (she needs to learn to deal with real life vs. she's falling apart) when dd12 was in 1st grade. She had a major issue with her teacher and the school wouldn't change her to another classroom. She was becoming depressed to the point that she was telling me that she wished she had never been born, she was "so stupid" that she wanted to be dead, etc. Obviously she's not a "stupid" child, but she did learn very differently than the teacher taught and was having tremendous anxiety about the color coded reward system, teacher yelling, and being punished for her learning style.
In our case, we did take her out and homeschool and my only regret was that I didn't do it sooner. I viewed it more as a "reset" as someone else mentioned. I don't bail her out from all stressful situations but in that instance the stress was so high that she wasn't learning anything. I am referring to learning coping skills, not academics (although that wasn't great, either).
Sometimes the emotional fallout becomes so huge that the child shuts down and not only doesn't learn to cope with tough situations but learns that he cannot cope b/c he isn't making any progress in diminishing the anxiety from day to day. He, instead, learns that life is stressful and there is nothing he can do about it.
I am not a fan of cutting and running whenever anything is hard and I've seen people do that. The outcome isn't as positive for a child. In our instance, we gave dd the break she needed, helped her develop coping skills outside of a situation where the anxiety was so high that she couldn't do any more than keep her head barely above water, and then later sent her back to school. She has, since, dealt with some very stressful school situations and come through them without us needing to remove her. She's a very well adjusted 8th grader now with a lot of friends and good coping skills.
Long story short, despite what your counseling team may be saying, you are the parent, and I would consider homeschooling strongly in your situation. I'd also investigate other moms who might be willing to do a co-op such that you might be able to keep up with a job you enjoy.
