So Dr. Phil is the answer to stay in town hockey and not worry about going "to the show?" Heck in our town the town hockey kids don't make it to 'the show' and in fact they don't even make the varsity high school team.
If I could just get all of the parents to agree that we are all keeping our kids in town hockey then it would all be fine. And oh yeah, someone tell the high school coach his teams are going to get steam rolled for the next 5-10 years.
Welcome to the new age of kid's sports.
The answer to stay up or go down is a decision the parents should make knowing their child. Gaining confidence is a positive quality the kid might gain. There's nothing stopping any kid from moving up and down levels of competition. It happens all the time and generally can be good. However, that's a decision a parent has to make (objectively as possible, of course).
As a trained phycologist I would caution any parent who pushes their child with the belief they're going to the show. Certainly, support his dreams, but be careful not to cross over into your own (which is what many are unknowingly doing). I define a child as anyone between the ages 8-12. As they move into early adulthood then it's more appropriate to begin preparations that are closely aligned to the end goal. Whatever that may end up.
A kid who is driven by the passion of the game will motivate himself to become the best player he can. Whether he plays town, E9 or the EHF, is irrelevant.