Unrealistic dreams or encourage?

It should be encouraged within reason. Before thinking of a PhD, they should focus on A levels, bachelor and masters, there is a long way to go before they get selected for a PhD.
Also a PhD in itself doesn't mean anything without a proper career goal, so why do they want/need a PhD for?

I would change their focus on the career goal (there could be other ways to get there).

I also don't think that going abroad for your first year of uni is something to encourage unless your child is very very stable mentally.
I've moved away from my family at 18 for uni, and so did a lot of my friends (due to us living in a place with limited options), and it was very hard to lose all family support overnight. I would usually recommend waiting for the masters/PhD.

If your DC is 16 then a PhD is a long way off, both time-wise and in terms of interim achievements, maturity etc. And it's very common to do a PhD at a different university from where you do a first degree. Maybe you could help your DC look at different related pathways that they might enjoy. BTW, you haven't really said whether you think this goal is actually unrealistic for your DC, or whether it's something they could potentially achieve.

Encourage but have a back up plan. It's always sensible to have a back up plan anyway.

Could you make it so there are goals to achieve the ultimate e.g. a family member or mine did and extra year of a levels to get more grounding and experience for their degree

If language is a key factor that is needed to possibly achieve the ultimate goal the initial goal would be to obtain X level or said language etc?

Make a flow plan together and have branches for different avenues as and when they are ready to think about that.?

As in if they applied and did not get in would they get more knowledge/experience/skills and reapply the following year or would they apply to XYZ university for degree and possibly look at transferring etc etc

"That's great, dear". Would be my answer.

A teenager can change plans so many times during A levels.

If it requires a foreign language she/he could focus on studying? After all a second language at university level is a challenge.

I think you shouldn’t discourage, just make them aware that they can only do their best and the other options that are available to them if it doesn’t work out so they don’t feel like a failure, and make sure you are there for them in the event it doesn’t work out as planned. That’s all you can do really.

Presumably your DS will need other choices to put on his university application form - perhaps when it is a bit nearer the time, you could take him to some open days of UK universities - he might find one he 'clicks' with.

It might be the case that doing a first degree elsewhere with a view to doing a PhD at the target university is a realistic plan B?

It does depend on subject and institution, but this might well be easier to achieve too, because the competition for PhD places can be less fierce.

I think this goal absolutely should be encouraged (when I saw the thread title I thought it might be about an aspiring Premier League footballer or similar). However, encouraging a difficult goal doesn't mean you shouldn't have a plan B and even a plan C, so encourage your DS to think about other options as well - different universities; what he could do with the degree if the plans for a PhD didn't work out etc. The work he does to achieve this exact goal will still count towards alternatives at different universities if necessary, but there is no reason not to aim for the top academically as long as you have fallback options.

It's really difficult. My DD would go on a downward spiral and because of her fixed thinking, just couldn't come up with a plan B. I had to wait for her to grow up a bit.