Wow I am so sorry this is happening to you. I taught a student with Aspergers that sounded very similar to your Nick's. They are great kids and very very smart.
Im in Canada where teachers don't have "tenure" however, it is my understanding that no teacher can do whatever they want without consequence. I'm sure she feels she can since she does have tenure. I would definitly take this up with the board.
How does Nick feel? does he like the class or does the "low" mark bother him? If he likes it and it is challenging him (which is what school IS all about) then I would ask to keep him in.
However, you are his parent- you know what is right for him better than anyone. I think you have every right to go to the board and I think you SHOULD do well there- assuming not everyone is like your principal and the teacher. Sadly there are MANY teachers out there that give the rest of us bad names. I'm not sure why they do what they do. Teaching is not easy but you do the work because you love what you do- and clearly she doens't. Good luck- keep sticking up for your son.