pc, there's valid reasons. They are case by case, and relevant for the most part only at that particular time. Your post and your open mind to both sides of it speaks to your head being in the right place. I've witnessed it personally and heard it time and again here that it's an automatic gateway to more success later on. It's not. To approach the decision with tunnel vision focused on that alone is not good for the player or his family.
It boils down to two least common denominators. One is having fun. The other is getting better. My son is young for his grade, and we faced this while he was playing youth ball. He did both at times - played up and played at his age level. He always "practiced up." In the end that was most beneficial, especially for a kid that has wanted to play in HS since he was your son's age.
For my son it started out as an ego thing, but quickly turned into wanting to play with kids in his grade. I just dropped him off at workouts and took a moment to reflect on the fact that he's been playing this game most of his young life. I watched him interact with the other kids before they went inside. He's a sophomore. With the Frosh kids (kids he's played with a lot) there was a lot of laughs and joking around. With the kids in his grade there's a much different mood. Glad to be there - no doubt, but more of a serious and focused mood. He struck me as very well adjusted and equally at ease with kids in his grade, upper classmen, and the Freshmen.
His coaches last year commented on this...that mentally he was an asset because he both had a calming and intensity about him. It's a testament to how he survived youth ball (and me). He still really loves the game. He got out of bed, put a t-shirt on that says "Wake and Rake," and he was happy to be able to play baseball today. Shoot for that with your kid. You won't be disappointed.
There are two kinds of losers.....Those that don't do what they are told, and those that do only what they are told.