Hi Drosophilia
When children are in mixed aged classes, they are probably taught on a 2 year rolling programme. This means that one year, the whole class will be taught the content of the Yr 3 curriculum (but differentiated up for the more able Yr 3s, and Middle to more able Yr 4s. The lower ability year 4s would sit comfortably within the normal Yr 3 differentiation.
The following year, the whole class will be taught the content of the Yr 4 curriculum, differentiated up for the more able yr 4s, and down for the middle and lower ability Year 3s.
Mixed age classes certainly give the more able children in the lower age group the chance to be stretched. The challenge for a teacher is always how to continue stretching those children when they are the more able children in the higher age group. It would depend entirely on the school you were thinking of transferring him to as to whether they would challenge him sufficiently. I don't think you can generalise.
I really enjoyed teaching mixed age classes because even though it can be hard work to get the differentiation right for a wider range of children, you have the added bonus of children with a wider range of emotional maturity and you tend to find the more mature ones (no matter which year group they are in), giving support to the less mature children.
I can honestly say that I taught to each child's ability and would have been hard pressed to say whether children were in year 3 or year 4. It just didn't matter.
What are the social issues that concern you? Is it thoughout the school, or just in Key Stage 2?