If you are seeing a decease in his rotation, then he is probably getting less scapular load and that could be why his velocity is dropping? When you said that he was surprised that he wasn't throwing harder in his first outing, I immediately thought rotation. Especially since he said he felt great. Also, look at his lead leg. Is he still getting fully extended and driving through? With less rotation he may be getting less from that leg as well.
I don't know where you are located, but if it's feasible to go to Driveline in Seattle and have him assessed, I would do it. It was the best thing we ever did with our son. They came out to the East Coast fall of 2018 and did a tour. It was not inexpensive, but worth every penny.
I am a true believer in heavy lifting and building strength...but only to a point. These boys aren't training to be power lifters. They are training to be the best athletes they can be and have that transfer to the baseball field.