Would you honestly recommend he keep going in the course if he was still failing by the end of the year?
If he struggles with the prelim course at the end of the year I'd probably say its best he drop down to General or drop the subject as a whole.
Your school sounds rather motivated.
There's always room for improvement, the majority of my friends went from doing pretty poorly in 2unit + 3unit (50% average) in year 11, to doing reasonably well in year 12 (70-80% average), so it all depends on the commitment of the person.
If you're on the 10 unit express, then i would say keep it, as opposed to dropping down, as you'll be relatively too far behind, and that will give you added motivation for year 12. Alternatively, if you're doing quite well at your other subjects, and feel that maths is simply dragging you down (80%+ in each other subject, and around 50% in maths) then i wouldn't be opposed to dropping.
At the end of the day, it really comes down to what you want to do, how commited you are, and where you want to go in uni, for example if you want to do engineering, maths, science or any of them, mathematics is a MINIMUM requirement.
Not sure about anna, but i went to a selective school, so i suppose we had added motivation only from wanting to do better in comparison to the top tier students, in saying that, its not like we didn't have the druggies and wanna be gangsters, they were just significantly smaller and in effect less obnoxious and disrupting