wish it were always as cut and dried as Coach E is able to make it at his gym!
We have a small team and at present no Future Stars (which would be an option to keep your kid learning new stuff but competing at a level they were really masters of). Here in order for a kid to work higher level skills they often have to move up...the big boy group is L6 and up, and within that the three 8ish plus kids (DS L7 is one of them because he's skipping levels and working lots of L9 skills) do different stuff...
The move from 5 to 6 is much bigger than from 4 to 5, but at least here, 7 is the big ugly level - tough scoring, and hard to do well at, lots of kids skip it, etc....esp younger kids - my older DS is doing 7 this year after 5, and doing great - but he's in the oldest age group so basically with a bunch of other late starters who are skipping levels, etc...when my younger boy gets there he'll be in the thick of the 62+ scorers....unless he repeats L6 next year, and he's scoring the same as your boy is at L5...he has NO intention of moving up next year, but rather staying a 6 and mastering all the bonuses (which would put him scoring 62ish in our region - don't know about yours). He has actually figured out that this would put him in a less competitive age group (he is a summer birthday so always has to compete with "older" kids....)
The reason I bring this up is that moving through quickly requires a kid who DOESN'T mind being average/never medaling, IMHO, or that kid will end up moving to another sport before they get to the cool stuff at L8 and up. We have one 7 year old kid doing L6 this year - because he wanted to train with the 6s to do higher level skills and this was the only way to make that "fair" on our small team. He is scoring in the 40s, although he has essentially all the skills and many bonuses (even giants). His form is a big issue, and his scores are pretty even across events because of it. Some skills are simply harder due to his size. HOWEVER, he's happy and having fun, and his parents expected this exact scenario, so its working for him. He'll sit at L6 for a while. One thing to keep in mind is that the routines at L6 are significantly longer than those at L5 - which means that if swings aren't with good form a kid is going to get deducted twice as much for his legs apart - even if can do all the skills, etc. same idea with pommel/mushroom work - form breaks will add up to lower scores than they did as a L5. This may or may not be an issue for your DS....
I will say that my younger boy was a totally average L5 his second year, middle of the road at regionals, etc. He wanted to try to go L6 this year, worked hard and is doing fine! Has all the base skills now (finally got the back uprise on rings this week!) and many bonuses on his strong events. He has gotten a couple of medals even in the high scoring age 10 group. I never imagined he'd be doing as well and the biggest difference for him has been form improvement! His coach was pretty sure he'd do fine from the beginning - so I'm glad he was in charge and not me!!!