Surely it is better to be honest about his ability rather than milking him for £££ week after week?
Now you've mentioned all the other factors, I'd agree...well....possibly. But I'm not certain. 35 hours isn't all that long; quite a lot of people take longer than that to go solo. And changing schools and instructors has its own problems - lack of continuity, different circuits, different ways of teaching. Yes, I know that appears to contradict what I posted before, but actually it doesn't - I'm just pointing out that there can be all sorts of reasons, apart from complete lack of ability, why someone can't learn a particular manoeuvre. And I'm not sure that any flying instructor can be certain that someone won't make it. It might be expensive for the person concerned, but that's a different issue. People take years to pass a driving test, and some of those are quite good drivers in the end, so I'm told. Slow learners aren't necessarily non-learners.
So by all means be honest, say you think it'll take a long time, and maybe not be possible at all, but don't state it as a certainty...because I don't think it can be. Any instructors who disagree, please say, as this is an interesting point.
The only time I'd think someone definitely shouldn't carry on would be if their attitude was all wrong, or if they were dangerous and looked like that was something they couldn't change.