Before I start, I am Roman Catholic, and have served as a CCD or catechism instructor. In other words, I do have some qualification to speak -- but I'm also NOT a bishop, priest, or other official voice.
I don't want to address the boy being banned from attending Mass in the church; there's simply not enough information from both sides for me to feel like I can do so. There's no evidence in the links provided about how much of a problem the kid was, or about what was tried earlier to work with it.
I will address the boy who wants to receive the Eucharist in his own way; as described, it is disrespectful, and I agree with the bishop that he is not truly receiving the consecrated Eucharist. First, let me make the Church's teaching on the Eucharist absolutely clear; at the moment of consecration a miracle takes place (transubstantiation), and the accidents of the sacrament, bread and wine, become the Body, Blood, Soul, and Divinity of Jesus Christ. The Church teaches that the host IS Christ; this is why the Church practices Adoration, and why any consecrated hosts remaining after Mass are either placed in the tabernacal or consumed if there is no tabernacal available. In accordance with this belief, the Eucharist is deserving of the highest respect; I'm aware of no precedent for "holding" the Eucharist briefly as a form of reception. However, physical acceptance of the Eucharist is not necessary for participation or even receiving the graces of the Eucharist! As long as one is properly disposed (mentally and spiritually prepared, including being clean of serious sin) for receiving the Eucharist, the graces are bestowed upon you. So, the boy is not being denied the graces of the sacrament. It's clear the parish and diocese have worked with the family -- but the family apparently wants to dictate the Church's practice. That's just not how the Catholic Church works.
A similar issue has arisen lately around people with celiac disease or other reasons why they cannot consume wheat. The current teaching and guidelines are specific about the host's composition, and apparently the rules do not permit a gluten-free host. Some parishes permit people who cannot receive the Body (consecrated host) to receive the Blood (the wine) -- but I know of a few priests who do not or who require it to be offered by a priest or Eucharistic Minister.