he is now failing, on top of being held back.
No, he is learning at his pace. Support that. He is learning at his pace. And if he was a young-pre-K, that makes him a young-K and he would forever be on the young side. So repeating makes sense. Honestly, as long as you have a supportive IEP team, repeating pre-K or repeating K isn't much different. So you did not fail him and he is not failing. He is progressing at his own pace.
I am a little confused if he just got an IEP (first time, now near the end of K) or if it was just renewed (because IEPs are updated every year with an evaluation every 3 years). If he had SLP in pre-K, I assume he already had an IEP, and yes the kids need to be in a school setting (includes pre-K) to receive IEP-related services. That explains why he was pushed into pre-K as soon as he was old enough. My DD also needed to be in pre-K for her services at age 3-4-5; we did repeat pre-K instead of starting Kindergarten at 5+1 mos because she was so far behind. But don't beat yourself up over not repeating pre-K then needing to repeat K.
As to the classroom placement...did you question the principal more about the suggested new placement? Does it have more of a special-ed focus? Does that teacher have more experience with special ed and/or autism? Not that experience must override an existing connection, because it sounds like he has connected with the current K teacher. Will there be any continuity of other supports he receives (speech, a para, behavioral specialist, etc.)? I would ask if I them to arrange for you to visit the new classroom, maybe meet the new teacher. See what you think. Then ask to visit again with your son. They should have written a transition plan for helping introduce and acclimate him to the new classroom and new teacher. If not, you can request that.
If you don't like the visit, or they refuse to allow you to visit... well, I'd be tempted to push the matter up to the district level. There should be a formal process you can follow to dispute the proposed placement. BUT (and I say that with a huge BUT) how has your relationship been with the school in general, the principal, and the current teacher up until now. You will need to work with these people for the next few years, so trying to find a compromise is always better than digging in your heels and creating more tension and stress that just follows you (and your child) for the next few years. My DD is a 5th-year high school senior now, but I always found meeting them halfway and trying to be a team worked out best; there were only a couple of times that I felt I had to really insist about something.