If he improved in 6th and 7th grade, then I wouldn't worry too much about 8th grade being an aberration. Especially with high school around the corner and new coaching he should have a good stimulus to improve.
First off I agree with everyone that when it comes to young adults having them train at many things is ideal for their future coordination and general athletic ability. Having said that, I fully believe aerobic ability can be trained from a young age. The danger you do run into, though, is having the running go stale very quickly. It's almost always because it's too aerobic or to anaerobic. It's very difficult to balance things with a kid that age.
My recommendation to you is to make more than 95% of the running easy aerobic running. And I'm not talking that crap where you tell the kid to run at a steady effort every day but the kid doesn't know what steady means so he's basically running tempo every day. I'm talking about easy running and the kind with which he may have to tell his buddies he's not running with them if they can't keep it at a pace he's comfortable with doing. I recommend that the only speed you have him do is strides. Any interval training he gets should come as a byproduct of something fun like soccer, flag football, basketball, frisbee, baseball, or whatever at recess or gym class. If these kids are doing any sort of intervals or tempos in their running, then they are overdoing it.
I don't recommend ever really comparing your kid to peers on the same team. Kids can be very envious of better teammates and if your kid is trying it can become very demotivating to see others excel beyond you, yet this is the nature of sports and especially running where times and performances remind you where you stand on an almost weekly performance.
P.S. The weekly performance aspect of high school racing burns almost every kid out. It's not advisable. If your kid likes racing, you may want to consider letting him race no more than once per month.