In all honesty, I'm on the fence about wearing a kilt to church. On the one hand, a kilt really is "the best" - they're well-made, expensive garments and really are excellent elements to truly make "Sunday best" your best.
On the other hand, like Jeremy said, it could be seen as a distraction to others - and I completely understand that.
My interest in the Kilt came about because of family history and a desire to feel a connection to my ancestors. The LDS church is all about family history. My third-great grandfather sent his wife and young children to a foreign country to travel across uninhabited territory while he stayed behind to preach for over a year. When he arrived in Salt Lake, he was a founding member of the Utah Caledonia Society. I have a feeling he'd have a thing or two to say - maybe reminding folks that the worth of souls, even those that wear kilts, is great in the sight of God.
I would schedule a time to meet with the bishop and ask the reason behind his decision and politely remind him that it is difficult to find youth that are interested in genealogy, and that you feel it's best to encourage your son in building that connection to his roots. You might want to mention that there are a good number of LDS men who wear kilts to church functions.
In the end, what the bishop says goes. You can take it up with the Stake President if you want to, but the calling of bishop tends to "expire" after five years, so you can always try again later.
Lastly, my Grandfather, upon turning 12, was asked to wear his best clothes and a white shirt so that he could participate in the church service. He came from a large family that didn't have much and his best was a pair of overalls and a simple white shirt. The boys teased him about his clothes so incessantly that he never went back to church. Boys will be boys, I admit, and I don't think anybody could place blame there, but I never had the opportunity to meet my grandfather because he died of lung cancer when my father was 17 - cancer he got from smoking. Since the LDS church preaches against the use of tobacco, I often wonder if I would have known my grandfather had those young men been a bit more accepting.
To summarize a long post, I think it's great your son wants to wear his kilt and I feel it should be encouraged. I am deeply sorry your ecclesiastical leaders don't feel the same way, and I hope you can start a meaningful discourse with them about it and come to a consensus that allows your son to wear his kilt at least some of the time.
There's a proud descendant of many Scottish pioneers rooting for you and your boy!
- Brian