Yes, you can challenge it. They will give you all sorts of reasons why he should go full time e.g. "all the others will be doing it and you wouldn't want him to miss out socially", "he's one of the older ones and the older ones always cope" etc. etc. etc.
However, you know your own child. I think the best thing to do is to make sure that you've accepted the school place formally. Then, make an appointment to go and meet with the headteacher and Foundation Stage Co-ordinator to discuss your concerns.
Also, you could speak to the Early Years Team at the LEA and let them know that you know about the ""By law, your child reaches school age at the beginning of the term after the one in which his or her fifth birthday falls."
The other thing is that actually, once you've accepted the place, I think you can actually defer him starting school until the January. Given what you've said though, I don't think this is a good option. It sounds like a few weeks (or half a term, or even a whole term) of part time might help him to settle in and give him the confidence to develop friendships with the other children.
You don't need to fix anything in stone at the beginning. Why not play it on a week by week basis and see how he copes after a week of part time. If he needs to do another week of part time, then that's what he does.
I'm a former Reception teacher and deputy head and feel very strongly that children are ready for school at different times, and it is up to the school to ensure that all children have a positive and successful transition into Reception. As such, I have always worked in a really flexible way with parents to ensure that each child's needs are met.