Congrats to your son and family. That is very exciting for your son, and not something you hear everyday. Walking on is no small feat, and I'm sure he worked very hard. It is hard to help from a computer screen and somewhat removed from the emotion of the situation. Based upon what you've shared, here are my initial thoughts:
1) If he really likes the school, coach, teammates, and academic situation I would do it. Finding that perfect fit between academics and athletics is very elusive. If you find the right fit, grab it by the horns.
2) I would stay away from the D1 camp if he decides to join the D2 team. Do your hitting drills elsewhere.
3) If he was trying out, that will not count against his eligibility. He was not a recruited athlete, and he was not on the roster.
4) The redshirt issue is a tough one. I would want to hear (again) why the coach is recommending it. 40 ABs or any playing time as a freshmen is good. The chance to play in any D2 post season games is even better. I'm sure your son really wants to play in a game this year...so I probably wouldn't do it without a really good reason.
5) D2 has 9 possible scholarships at most. Rosters are unlimited in D2 as you know. Your son may want to discuss the financial side of this with the coach when he talks to him next. If there is as much team talent as you are describing, those scholarships are probably spoken for. Your son is not really in a great position to ask for a part of those scholarships at this time, but he can ask what he needs to do to get in that position.
I hope this helps at least to get another perspective.