Unless this is some fancy dance school that specializes in putting out Prima Ballerinas then I don't see what the problem was in letting the kid in. If it is one of those schools then they should have said to the parents, "this school specializes in training professional dancers and starts with kids at an early age. We are sorry but your kid just does not make the cut" There are kids with and without Trisomy 21 who are not going to make it if that is the case. If that was the case and they had worded it better then there would have been less hurt feelings.
We don't know, since they don't name the place. It's a private institution; in a free country they'd be free to set their own standards for acceptance. Frankly, this whole thing smells like manufactured controversy to me.
Oh, yeah: The "Americans with Disabilities Act" was and is a gross violation of the Constitution, and an outrageous power grab by an utterly out-of-control Congress and federal bureaucracy.