You are right, it is always possible to go above and beyond, and your son surely benefited from taking the physics assignment to the next level. Once he gets to college, however, there should be plenty of opportunities to go to the next level, especially if the institution has both undergrad and graduate programs. I don't know how things work in Australia, but in the US, you can take graduate courses as an undergrad and get involved in research.
While it does depend on which sort of engineer you are, in general, engineers don't use a lot of math day to day. I very rarely use anything beyond elementary school arithmetic. This doesn't mean that the math courses are worthless - I think they are valuable, especially because they require critical thinking skills.
I also realize from your story that my kids were lucky to take HS physics from teachers with PhDs in physics. I expect that is a bit unusual, though for high schools that offer AP Physics C, the teachers would need to have a good understanding of calculus.
