Paranoid
Apologies in advance, this is a bit long, but HTH.
I think you may be getting yourself a bit confused with national curriculum levels and educational levels.
National Curriculum levels apply to levels 1-8, these are used to determine where a child is academically between the ages 5-14.
Educational levels Entry to level 8, are used to determine the level of academic study the individual is undertaking. Explanation here www.direct.gov.uk/en/EducationAndLearning/QualificationsExplained/DG_1003901700
More here www.ofqual.gov.uk/qualifications-assessments/89-articles/145-explaining-the-qualifications-and-credit-framework
And here re functional skills www.qcda.gov.uk/qualifications/functional-skills/64.aspx
Functional skills are a 14-16 qualification, along with GCSE?s and some BTEC?s. They are not usually equated with a NC level, though the level a child is working at towards the end of KS3 will determine the pathway they are offered going into Yr10 (KS4). Functional skills courses are generally offered to children who are either not expected to gain traditional GCSE?s, or who may struggle to do x number of GCSE?s. For example children offered an ASDAN/CoPE level 1(functional skills) course will study a number of subjects www.asdan.org.uk/Qualifications/CoPE_1_and_2 at the end of which they will achieve the equivalent of one GCSE grade E/F, in our school children would also take two GCSE?s alongside this course, but not maths or English. E/F is probably equivalent to a NC level 5.
You need to be careful with BTEC?s and find out what the school offer ? level 1?s or 2?. Level 2 BTEC?s are allegedly equivalent to 2 or more GCSE?s usually grade C or above, which is no good if your child is working below this level. Voice of experience on this one having had a child come home for the last year stating ?teacher/TA has told me what to write?.
In my experience m/s secondary schools tend to follow the national curriculum for children between the Yr7-9 (though schools are increasingly starting to do GCSE?s in YR9). If your child struggles with reading/writing/maths they may be offered a scheme such as Success Maker; if he meets the criteria www.successmaker.com/Subscriber/1,24/1,20/Start.html otherwise he will do the same as everybody else (differentiated and streamed) .
This is a link to a set of stats depicting what children achieved nationally between 2004-2006 giving KS3 grades and GCSE grades www.scribd.com/doc/2535171/KS3GCSE-English-and-Maths-Conversions Can't find the link for KS2/3 at the mo.
Theoretically if your DS is working at NC level 3 at the end of KS2, you would expect him to make some progress by the end of KS3 (Yr9), for arguments sake let?s say he achieves a level 4. If he progresses at the same rate, no problems, manages to keep up etc he could possibly achieve an E for maths and Science and a D/E for English, but this is not fixed in stone, he could do better or worse depending on a number of factors eg the school, teachers, his peers, interventions, his attitude to learning etc
Take into account his SEN and the fact he is currently in a unit, he could struggle in a main stream secondary. Larger, more children, fewer resources etc. Is it not possible as somebody else suggested to find a special school in your area that gives children the option of doing GCSE?s if he is able?