I know exactly how you feel. My daughter's Kindergarten teacher last year was asking the same exact questions and voiced the same concerns. I did not feel that retention was right. In my heart I knew my child and I knew that this issue was not related to anything but her decision that she did not want to be a student. She loved being with me and hanging out. We did test her for the SI and not because the teacher asked us to, but because her older sister has SI and dyslexia and we had to go through a whole program with her (She is doing great, is at grade level, and is reading great now in 3rd grade).
I don't know if you son is stubborn (I guess you said he was above), but my daughter is and this was a choice thing and so we had to deal with it on that level. We decided to put her in 1st grade and see where the chips fell. The thing that helped the most was the non-participating chair/bench. If my daughter decided she was not going to participate or do her work at school, then she had made the choice that she did not want to participate and when she came home she sat in this chair doing nothing (absolutely nothing) This meant that when I got the report from the teacher that she had decided not to work that day, she would come home sit on the chair until dinner (unless she had to go to the bathroom), have dinner with the family, and then go back to the bench until it was time to get ready for bed.
No-one could talk to her and she was all by herself just sitting there. She did not have to spend many days on the chair (three because she is so stubborn) and then she realized that this was her life if she decided not to be a student. We did this at the end of kindergarten and had to repeat this again a few times in 1st grade.
However if the issue is that it is just a homework thing, then maybe he needs some time not to sit down right after school. I have two kids that can sit down, get the work done, and move on. I also have two kids that will spend hours not doing it and have even gone so far as to hide their work, so they don't have to do it. I discovered that since my children are all up by 6:00 or 6:30, that the ones that could not sit and do at night do great in the morning after eating. They focus really well and get it done quickly without the arguments and without the hassle.
As far as the testing thing goes, some kids don't test great but are successful in everything else they do. Tests are measures for the school district, state, and federal government, but they are not always indicators for how well a child is doing in school. You might talk to the teacher and find out what is going on or even go observe what your child is doing when it comes time to take the tests. Some kids just don't want to sit there and take the thing and so they goof off and answer things in silly ways because they are tired of ordeal. If the teacher is giving the test while the other kids are working (in Kindergarten this happens a lot because they pull the kids aside to ask about name recognition for the alphabet and the letter sounds) it may be really distracting for a kid who just wants to be done and go "play"
Also, before you do anything you have a right as a parent to have a school psychologist test your child and sometimes because it is a quiet environment kids that did not do well on the testing in the classroom did great with the psychologist (my daughter did) and this is when the Kindergarten teacher realized just how truly stubborn and distracted my daughter was. Good luck and hope this helps. ( Montessori is great. My daughter is in a Montessori program through Mesa Public Schools; they have three schools now that do Montessori, but not all kids do well even in that setting and now we are moving her to the International Baccalaureate program that Mesa offers at Frost Elementary).