Dilligaf, what's the name of the headmistress at your DS's school, is it Mrs Gradgrind??
It's Dorset's policy??? Who the hell is she kidding? I simply cannot believe that that is true, and if it is, I would raise it with my MP. What the hell is the council doing having a blanket policy on joined up writing by the age of 5? What are they trying to achieve, disaffected criminals by the time they are eight? Sorry, I'm not one for putting faith in local government or anything, but I think your DS's headmistress must be lying.
I can well understand why you are thinking of home edding, and if I lived in Dorset and found that that was their educational policy, I would too. Or I'd move. But I can't believe it is, so as a first step, I'd look around for another school - the one your DS is going to is obviously staffed by nutters, the drink episode shows a level of incompetence in dealing with a 5 year old boy that is completely inappropriate in a teacher.
You're not being neurotic here, Dilligaf, you really are dealing with a bunch of loonies. Get your DS away from them.
Oh and agree that it's an immense achievement that he can read - my DS, also 5 can't, let alone do joined up writing. And guess what - I'm not remotely worried about it, and neither is his school, because they are not lunatics in Dorset!