A.H.
WOW! I don't really have an answer for you but I would be really upset if a teacher said that to one of my kids. Especially since he seems like he is trying really hard. If he had all Cs and Ds and brought them up to straight Bs, it seems like the teacher should have congratulated him on it instead of putting him down. As far as the essays go, that seems like an awful lot for a 3rd grader. My son is in 2nd and he would have no clue what to do or what to write and he does really good in school all on his own.
Good luck and yes, I would definately put a call in to the principals office or send an email to the teacher and carbon the principal on it so he/she is aware of what the teacher said.