You can send AP scores to the colleges before acceptance. However, I don't know if they would give that any more weight than self-reported AP scores on the Common App. I wouldn't write about it in his main essay. On both the Common App and other college applications, there is a section for additional information. He could it address it there, but it really would be best for his guidance counselor to write about the special circumstance in his/her recommendation.
As for AP scores in place of course credit, I think different colleges will have different takes on this. Private schools might give him some leeway on the "required" courses, since they make their own rules (and can break them, if they so desire). Public colleges may not be able to look past those required courses. I am on the East Coast, but I understand that the UCs have required courses, and they don't let you slide on those (even the non-academic arts courses).
As for taking the Physics 1 & 2 exams, it doesn't hurt to try both, but if it is a Physics 1 course and they don't cover Physics 2 material, it could be a problem. And the school can't have much of a history with taking the Physics 2 exam - 1 & 2 are new exams, just started last year. And they are quite different than the Physics B exam that they replaced (more conceptual, B was more grinding out calcs).
I would go with the audit rather than fail - that is a no brainer. Your kiddo should be thinking about where he will apply next year. Kids with great SAT/ACT scores but transcript issues/low GPA need to be thoughtful about where they apply. Unless your son has some outstanding hook - international awards, very important published research, recruited athlete - he shouldn't focus on Ivies or other elite schools. However, there are many fine schools that would like to have kids like him. Look for schools with good LD support as well. His guidance counselor may be able to help.
