My response will be a little different than others above - but that doesn't mean there's anything wrong with the other responses. I just want to offer a different angle.
I tended to look at this a little different. Is the choice of college from a baseball perspective only to allow my son to play more baseball? Or is it to give him options in life beyond baseball?
Both of our sons (finished with college, now minor league players) would have said they wanted to be involved in baseball forever at age 17/18, but as their parent I wanted them to be prepared for the possibility that it wouldn't work out that way...or they may change their minds.
So their college choices were based on a) picking a school they were 110% happy about outside of baseball, b) would give them a good education and c) fit their abilities baseball-wise.
IF...the only college choices they would have had were not a good fit academically or for preparing them beyond baseball - they would not have played college baseball.
It seems to me that your son is telling you what he wants - to attend the college he wants to attend (big school) and take his chances with baseball (walk-on). You, yourself said, "We have always told him he needs to pick a college that he would be happy with even if baseball was not in the picture."
Baseball is fleeting. If your son is the next Buster Posey, you may get to play into your late 30s. Why not follow your own advice?