Its not like there's an age requirement for an algebra license or something!!
LOL - but, the thing is that algebra requires abstract thought. And teachers are trained at school to believe that abstract thought just isn't possible below a certian age. ((Thanks Piaget! - JK, it really isn't his actual fault!)) Your daughter is very unusual.
Now to get the school to 'get it.'
Here's an idea that I haven't seen put into action before, but who knows. How about the school allow your daughter to be in her base grade 'on the books' but allow her to 'audit' classes aimed at older kids. That way they don't have to worry about too much pressure, and she can at least be entertained at school? Then you can transition that into an actual skip, maybe?
Is homeschooling really not an option? How about moving? How about the public school 'over the hill' in the next district over? Things don't sound desperate yet, but you might be closer to desperate measures than you think....
Grinity
