Wow, what a cool principal! I think it is great that they have immediately identified him as needing more than his age/grade placement would offer. I totally agree that some writing issues (which often just require a little age and physical maturity to remedy) should not hold him back from pursuing academics at the level he needs. Please talk with your school and just see what they want to do. Perhaps he can stay at his grade and subject accelerate for part of the day. Perhaps they want a grade skip but with documented accommodations for his writing. See exactly what they want to offer before you freak.
Socially you may find that he fits better with kids that are closer to being his intellectual peers regardless of age or size. He may behave in a much more 'mature' manner in a class where he is engaged and learning.
We have a dd who just turned 11. She is profoundly gifted and particularly at that age she did not fit well socially with her age mates. She was great with kids a year or two or more older. She has learned to enjoy playing with her age peers along with younger kids now, but it took some time. I think it helped that we let the academics steam ahead and gave her opportunities to be in classes with older kids. She currently takes a couple of high school classes, which meant back in August she walked into classes filled with 14-17 year olds when she was 10. She fit in great. The kids like her and treat her well. I see them genuinely happy to see her and chat before class. They are not her good buddies, or hang out on the weekends, etc. that is for her group of friends outside of school who are more or less her age. It is a bit of a juggling act, but having different peer groups for academics and for play time has worked for her so far.
Check out www.nationdeceived.org
for some literature on acceleration. It will give lots of positive reasons as well as many different ways to accelerate. Perhaps reading about what it may entail and what your choices could be would help. Check out www.hoagiesgifted.org
for more articles. Sorry to write a book back but you may have a wonderful opportunity. It is of course important to discuss your reservations about accelerating and the school should have a plan you feel comfortable with before you allow it.
Any more specific acceleration questions?