Ugh. I am don't know how it works in our current school district. I know that when we were in CT, it was taught in that way as well. They say that 80% of the kids can learn to read that way, and they didn't want the kids to take the time to sound out words. That means they are planning on 20% of the kids failing. They then wait until after the third grade to send the kids to remedial reading. This happened to my neighbors daughter. Very sad, and it makes the kids feel like they aren't good at school. It really reinforced my decision to homeschool.
Kids vary so much, I wouldn't be at all concerned. My youngest corrected my oldest about the sounds the letters made when he was two. It was disheartening for my oldest, but he was only five, lol! My nephew is very active and smart but won't sit still to learn anything. They asked him to count as high as he could when he was four and he counted to two. I think he probably could count higher, but he wasn't going to because he didn't want to. I don't think that if you took a group of adults you'd be able to tell who read at 3 or who read at 9. It just doesn't really matter.
I'm in the "better late than early" camp too. I never did any school at all with my kids til they were 5. I don't think a child needs to know this stuff at 3 or 4. Some kids want to know it, but most kids don't need to. My biggest problem with this poor kids story is that all he does all day is eat, sleep, and watch TV at a place his parents pay MONEY for! Why don't they save the money and keep him home?
Our district (the 100% sight words camp) also does NOT discuss spelling. At all. Until Jr. High. Kids are taught to 'spell' based on however they think the word is spelled. Keep in mind, though, that they aren't taught phonics. So it's a real mess. They say that spelling 'correctly' ruins the writing process.
Ugh, isn't that called 'invented spelling' or something? I recently read a great article about learning to read. I didn't realize they were talking about 'balanced literacy' (which isn't balanced at all... just a bunch of sight words with a few phonics thoughts tacked on in 3rd grade) until they mentioned that kids would finally be able to spell correctly starting around FIFTH GRADE! Nauseating.