Thanks for all the feedback girls and boys.
Yes it's possible there was a misunderstanding. Aden has used references to satire in his paper also, so I'm still not sure what the problem is with the teacher.
It all happened like this.
Aden brought the task sheet home with all the criteria for the paper, and guidelines for what he needs to do in order to achieve whatever mark he's aiming for. So I looked at all the info with him, and he selected the question he wanted to answer which was something along the lines of, "How was the speech by Old Major twisted by the pigs and distorted into a different message" (sorry I can't remember the wording exactly right now, but that's the gist of it)
So we talked about the different tools used by the author, and one that came up was allegory. The fact that it's a story about one thing but represented by different characters. He worked on it pretty solidly and came up with a really great intro which talked about the story being an allegory for the revolution and rise of communism in Russia. He did research and we talked about which characters represented which historical figure and he seemed to me to have it all pretty neat and tidy. Meaning he seemed to have a fairly deep understanding of what he should know.
eta: Aden also mentioned that the story was completed by 1943 but no one would publish it till the end of the second WW. The teacher said that was wrong also.
The stupid thing is, the teacher told Aden he was wrong, then handed out an example essay for the kids to read which used almost the exact statement Aden had, so that's when Aden felt vindicated enough to bring his concerns home and ask me what I thought he should do.
So in the end, my advice is that he should finish the draft as he began. Maybe the teacher will understand his point better once it's all down on paper. If not, Aden will have the teachers feedback on the draft, and a week to make whatever changes he needs. However, he says he's not selling out and that he believes he's right (and I think he is too), so if the teacher is still saying he's wrong, and marking him poorly, we'll get some independent advice from English teachers at other schools and present the argument that way.
The issue is that every single piece of assessment Aden does from now on will count towards his final grade when he leaves high school, so he really can't afford to get dudded on even one paper. He wants to do science at uni, so he has to get a pretty good mark in the end.
I think he's lucky to have parents who are able to make a critical judgement about where he's at with things like this, and who are able to lend him a voice to ensure the best outcome. I feel sorry for kids who have to do it on their own. It must be so much harder.