L.C.
Has anyone pointed out that a great deal of reading is nothing more than memory work? NO ONE knows a word before they learn it. The expectation of knowing things before learning them is popular and seriously delusional.
Being 'slightly below the norm' is ... normal. It is, in fact, it is extremely unusual for a child to be at, or about, the 'norm' in more than one area.
Do you appreciate people demanding you perform a task, with an audience, that you do not feel competent at?
Personally, with documentation in my hand (take a look at Alfie Kohn's The Homework Myth), I would explain to the teacher that there will be no more homework produced in this home until he's feeling better about himself and until he can name at least 6 things he does well.
If you're not prepared to do that (and lots of people aren't, which is fine), see if you can't find a way to make homework a whole lot less important, and 'put away' the reading practice to give him time to relax about the issue for a while until his brain catches up. Really, constantly worrying the issue doesn't create learning, it creates stress. Give him a break from trying, so he can have time to sort through it and assimilate what he's already learned.
Some people take longer to learn reading (math, skipping, you name it) than others, and pushing it makes for resistance (as you've found), humiliation (which you have witnessed lots of) and a growing sense that 'I can't' which makes people give up trying in shame. To avoid those icky results, talk about how it takes different people different lengths of time to learn things, that there are things you've only learned this year (be specific), and that there is actually a lot of time available, and he'll have caught up in no time.
Make sure you have a sense of 'lots of time' and that will take the pressure off all of you. Remember that it is impossible to tell, at 20, how long ago anyone learned to read. It is just not that important.