I am so sorry about this, OP. Of course your DS is demoralised; it is the natural reaction.
As a former STEM admissions tutor I know there is some truth to the idea that gap years may be a source of concern in Mech Eng. However if DS hits his mark that will help a lot, and a plant to keep up with his Maths and Physics will often put admissions tutors’ minds at rest.
Before deciding on a gap year I suggest DS email the admissions teams at a few universities of interest and ask whether they would consider a gap year with this caveat (presenting, briefly, a concrete plan)
If he decides to take a gap year and hits his mark, he might also consider making some applications to American and Canadian universities. (Trump’s controversies are only hitting a few places and really not having an impact on UGs). I see you mentioned private school, but I will note anyway that a number of elite universities and four year colleges (a fantastic - and hugely desirable and competitive - option we don’t have in the UK) offer generous needs blind admissions packages. That means students are supported by grants and scholarships, not loans, and minimal term time employment (which is typical in America anyway).
Eg Harvard and MIT are now tuition free for all students with family incomes less than $200,000. Harvard, Dartmouth and several other Ivy League + institutions pay all expenses when the family income is less than $100,000. Of course there are sliding scales between and above these numbers.
One very tantalising programme I just saw is a dual degree programme, majoring in an arts and sciences degree at the superb Amherst College and simultaneously earning an engineering degree at Dartmouth. Both Amherst and Dartmouth offer their needs blind aid packages to International students.
I am sure there are loads of others. If you even want to think seriously about this it would probably be helpful to work with a good consultant; I am afraid I have no idea how to find one. The application process is very different to the UK.
Again, I am sorry this happened. I hope DS will have a good wallow for a couple of days then pick himself up and make Bristol regret this. (Civ Eng can be great, but that is not the issue)
One thought: this is in no way a reflection on DS personally. His gold medals alone refute that. But we know that about 80% of predicted grades are inaccurate, with most over optimistic. Some schools sadly have a reputation for being unreasonable and a higher proportion of private schools than state schools are probably tarred this way. Is there a chance DS’ school is guilty?
In any case I am rather shocked. Our offer is very high (not giving the STEM subject) and we would likely have made him one in about 5 seconds.