Sounds like he's close to reading on his own now.
My DS11 was reading at 2.5 without being taught. He'd always loved being read to, so we kept stacks of books around and read and read and read. At the time, I didn't know that 2-year-olds were capable of reading and I figured he'd learn to read in kindergarten years later with everyone else. Then, out of the blue at breakfast one morning, he read words from a newspaper article on coal mining, and I about fell off of my chair. He quickly went from that to reading easy readers cover to cover. By kindergarten (early start at 4.5), he was reading at a 4th grade level. This had us more than a little freaked out for years, but it's all good!
I'd just keep reading to your son and let him make of it what he will. At that age, our DS also loved the Starfall site and word play--puns, rhymes and homonyms--anything involving words. Also, don't be afraid to read things that would seem to be way over his head. They'll surprise you!
