Jen,
I'm so sorry you're having to reevaluate everything again. This rollercoaster ride is exhausting and it's so disheartening when, when you think you've finally gotten things in a good place, the school starts pointing out problems again.
The first thing I would say is try to talk to the teacher in person. I know I've often gotten upset when a teacher has e-mailed me about a seemingly gigantic problem only to talk to the teacher and just find out that she was "concerned." Sometimes, but obviously not always, teachers just feel like they are constructively sharing so you can work on a problem together. They don't realize how much we take their comments to heart and how much what they say can rock our worlds. So, just in case, I'd try to talk to her face-to-face.
That being said, there is always a need to work on a child's response to disappointment, especially since your DS is just 7. He's not the only kid to have a problem with this. If his response to frustration and disappointment is stronger than most, I would think the same basic behavioral techniques that LaTexican wrote about would still be helpful. This may be a naive and simplistic suggestion, but have you tried incentives for good behavior at school (e.g., stickers, candy, money, saving up for a fun outing)? I've seen it work, albeit very slowly, for some kids. Obviously, though, it's a complex issue that has many variables that need to be examined and possibly tweaked.
Please talk to the teacher now or when you get a basic game plan/response set in your mind. She may think it's a big deal worthy of removing him from school or she may have just been "sharing" in an attempt to be helpful. Either way, ((HUGS)) to both you and your DS, who is just a sweet, smart little guy.
