May vary from council to council, but my understanding is the dyslexia screening in school isn't the same as a formal diagnosis. It is mainly a computer based assessment. If your council is one that funds a full diagnosis then stick out the process.
If you think he may be dyslexic, But the council won't fund full diagnosis then look on the dyslexia association website for an approved assessor.
We were given a contact name by the primary school. The person used to work for the council when they still did diagnosis themselves. They ( or one of the team) also went into local schools. The assessment took about 3 hours, but was split into two sessions. The report also made recommendations for support. The primary school were used to seeing reports from the same person. DD had one of her team of tutors for a 1-2-1 session for about 40 mins each week. Worth every penny for the progress that was made. Dd went from hating having to read, to being a book worm. Results in school improved massively in primary.
The school should be able to request exam access arrangements such as more time if it can be demonstrated that it is required. This can be regardless of diagnosis, and will often need an assessment being done in school, to meet the requirements of the exam board.
Year 8 seems early to choose, to start options in year 9. I know of other schools that do the same, because they spend time in year 9 learning subjects they are taking exams in, instead of subjects they won't continue with. This may be beneficial to your son- it could mean they can take a bit longer on topics and get a better understanding.
We were told to think about what they enjoyed, what they were good at, and what would help future job routes ( if they know what they want to do).
The school said not to pick based on teacher or friendship groups, because those could change.
If he is definite he wants to take the extra one, instead of the extra school support in maths and English, I think I would let him. The teacher being supportive may help. If the situation changes he could look to drop one, but can't add one back in. We were told by teachers that because words aren't learned phonetically in the same way as English, dyslexia doesn't always cause impact on leaning a language. May vary from person to person though.
If you can afford a tutor it may be worth going down that route instead. Paying for one means you can try and find one that your son builds up a good relationship with- he may enjoy and get more from session that way than being forced to do it with a school teacher.
We let dd choose. French was one she considered, because she enjoyed it, but it didn't make the pick. She chose other subjects that she both enjoys, is good at and are relevant to the work area she is thinking of. All the options chosen have a high coursework content, which takes some pressure of the exams themselves, but may create pressures elsewhere.
We are in Wales, where Welsh is compulsory, so still taking a language.