I am so sorry you're going through all of this. I can't know, of course, the intensity of your struggles with the school situation, but I can say this: I was 12 years old in the 6th grade and it wasn't because I was held back. And, I was/am fairly intelligent. I was pulled out of school after 8th grade by a messed up family and did not go to high school. I taught myself through a correspondence course and got my diploma that way without any help, but I missed out big time not having that socialization.
I'm just sharing that as a way to say please don't discount school just because of the grade issue. Maybe your son's progress in school will have them rethink his grade placement. If not, it's much better for him to be in a lower grade than too high. My nephew was the youngest in his grade and he was just not emotionally mature enough, and he was always getting into trouble and doing poorly as a result.
I'm glad to hear you're considering partial hospitalization. Sometimes, when I see that my life is turning into a mess, I try to do at least one thing I would normally say no to, because that's often enough to break the downward spiral.