As an aside, Google Apps has a similar problem. The requirements aren't as strict (8 characters), but they are a problem for some younger pupils.
Again, you can ignore them in the admin panel or by syncing a password hash using Google Apps Directory Sync, but if you try to set the password via the normal password change screen, or using the Provisioning API, you have to use 8 chars or more.
The fact is that neither Office 365 nor Google Apps for Education are actually designed for schools. They are business services that happen to work well for higher education, but have issues in secondary and even more issues in primary.