Wow. I have to say that I am relieved already by how many of us have similar experiences and frustration(!) whether it be with our kids, or - ahem - with ourselves. (All my elementary report cards had variations on the theme of "Julie needs to slow down and write neatly".)
But, as I've been thinking (and commiserating with some of you!) I remembered a few things that have helped / are helping...
1. I bought pencil grips. Real ones. I think they're about 3 for $5, so not cheap (disposable), but they've lasted through three kids. They work for either right or left hands and they look like this. (Click the picture for a link.)
2. If your kiddo is having trouble isolating their lower arm (and writing by moving their whole arm) have him lay on his stomach and elbows, and write down on the floor.
3. It's worth buying the primary paper with bigger lines, not just wide-ruled notebook paper.
4. Then I found even better paper. It comes in a (non-spiral) notebook by Mead and is lined, with little hatch-marks. Almost like graph paper, but not quite. That helps with the spacing. Put a letter in every space, and leave a blank space between words. They're called "Redispace", and look kind of like this:
5. Think big. Big paper. A big dry erase board to play with. Newsprint to write or draw on. (End rolls are really cheap from our local newspaper. Like, a couple bucks.)
6. Think really big. Chalk on the driveway is always a big hit - even with my 12 year old! I think it seems non-threatening because it's just so big, and it's temporary. My cousin even found some funky 3-D glasses that make the hot/cool colors pop out or recede. When Wyatt was 4 or 5 he took some chalk outside and drew an incredible likeness of the Apollo 13 rocket, complete with all the stages, the command module, and the lunar lander. Right next to a blue camel with 10 humps. I thought there were 12, but apparently those were lips.