Piffle, congratulations on having such a keen ds. I didn't go to Oxford (applied but didn't get in!), but have taught there (on a part-time basis, covering for people on leave... I used to teach in another university not far away). I also external examine in Cambridge, so have seen a bit of how things work there too.
I would encourage your ds... it's good that he's thinking about this now and that he's so motivated. However, I would also encourage him not to get too hung up about going specifically to Oxford. If he builds it up too much at this stage, he could talk himself to a point where he feels it would be 'failing' somehow if he decided later that he didn't want to go there any more (if that makes sense). Encourage him to keep his options open. Once he gets into the sixth form he'll be able to visit a whole range of universities to see which ones suit him. FWIW, I think that tuition in Oxford can be slightly patchy (at least in my area - an Arts subject). The university lecturers are obviously top-flight. But lectures are optional and tutorials are in the hands of the colleges. College lecturers are not necessarily brilliant (most university lecturers also hold a college post, but when there are not enough university lecturers to go around in a particular subject, colleges may appoint less... um... distinguished (?) people as college lecturers). Certainly it has happened that, when I taught there (lectures), students have come to me about comments that their college lecturer has made in tutorials which range from ill-informed to plain loopy-fruit barking mad! It will also depend a bit on your ds's personality. I was actually relieved in the end that I didn't get in (yes, really... not just saying that to cover for the fact that I had to make do with a second-rate institution!) because I was worried that I wouldn't cope socially and that academically I'd thrive better being one of the brightest in an institution with a broader range of abilities than stuggling to keep up in that sort of 'hot house' atmosphere. I have no idea how I really would have coped (and it has to be said that I was pretty insecure at that stage, which your ds probably isn't) but I certainly do still believe that Oxbridge doesn't suit everyone. For example, I hadn't been to a particularly 'academic' school (again, obviously unlike your ds) so I felt that I needed more 'teaching', more guidance on everything, rather than just being dumped in at the deep end and left to write an essay and discuss it at a tutorial. Just read that back and it doesn't sound right. I don't mean that you don't get 'proper teaching' at Oxford, but you need to be more independent.
I am definitely not trying to be negative at all. I'd be very happy if (in ...um... 15 or so years' time!) my dds wanted to apply there. But I'd tell them what I've just told you. It's really fab for some people, the best educational opportunity you can get (I know lots of people - friends and children of colleagues - who've gone and loved it). But it doesn't suit everyone. And also (I should say in defence of those of us who work outside of Oxbridge) there are some very very good universities out there, doing world-class research (when not wasting time on MN ), producing very well-educated students who go on to get good jobs, do PhDs or whatever...
I don't know how the funding situation is going to go in the next 7 years. I am fairly sure that I've heard that the VC of Oxford is quite right-wing and in favour of it becoming more and more like a private institution. But one presumes that he won't be around forever... And I can't believe that it is in the interests of Oxford and Cambridge to price themselves out of the market of 'ordinary folks'.
Anyway, sorry for the long ramble. Good luck to Piffleboy.