Sounds like you're on the right "track".
Because kids like to play on the floor, I set up a small S gauge layout on the carpet with a small conventional transformer and my 4 year old grandson quickly picked up on how to control the train by moving the red lever. You could do the same with an inexpensive HO Thomas-like starter kit, too. Of course, now at 6, he wants to operate my Cab 2.
I would also recommend a kid's LCCA membership for $25, which means he will get his own membership certificate and all the Lionel catalogues, plus special kid's publications, sent to him directly in the mail every other month or so. I got one for him as a birthday present and he really looks forward to getting things to look at in the mail and then we can "discuss" what he saw when he comes over. It also stimulates kids to start reading at an early age, which is never a bad thing.
