I would agree with lots of the advice on here - including Piffle's comment that you need a thick skin on this topic!
Definitely look for something extra-curric to challenge him. Learning an instrument is fantastic, because it's hard work for everyone. In current standards-driven education in this country many bright children never have to really push themselves at school, and get used to getting perfect marks first time, all the time. No-one can learn to play an instrument without putting in hours of practice - which is great for motivation and discipline.
The advantage of having an early, fluent reader is once they have learned to read, they can read to learn. Make sure you visit the library regularly, and invest in books.
To say that a high reading age of, say 12, at the age of 7 may not advance for the next 5 years is completely missing the point. If the technical skills of reading are transferred to a love of reading and literature, then think how much that child will be learning just through their reading over those years.
All published authors faced with the question "What should I do to be an author" say first and foremost read, read, and read some more. This applies at every level of ability, and if we want literacy skills in this country to improve we need to do more to encourage children who can read to transform into children who do read and want to read.