Yes I agree, but the top set of a grammar school (or a highly selective school of another kind) is one of the best options out there, at least in this country. In the US, they have gifted classes in some areas, which children test into.
I've now got the paper I was looking for, which is a synthesis of research into gifted education. It's written by an Australian, but international.
At the elementary level, representative studies reporting the academic effects of early entrance to kindergarten or first grade show a consistent picture of high achievement, good social adjustment, and stability of self-esteem measures.
Despite the many myths rampant about forms of grade-based acceleration, the evidence suggests that the social impacts are very positive for options such as grade skipping and slightly positive for the other forms of acceleration. Emotional impacts are small and positive throughout.
I think it depends how much you think the education system ought to adjust to deal with unusual individual cases, and how much the individuals should have to accept the way things are and adjust to working within a system which works for the majority.
it's an interesting moral question, isn't it. But were the child at the other end of the ability range, they would have special schools to go to, and the council may even pay for private provision.