Christine,
We've been away and I just saw your response. Wow, we have a plan! I like the idea of a grasscloth wall covering! And the good news is that my son is completely on board with your ideas (I would've done them anyway but I would've had to put up with a lot of "this is going to be terribles" before it was all done). I'm very excited to get started on implementing your thoughts after such a long period of indecision, but I have a few questions. He has two windows and a closet (see below picture) - we took the doors off his closet because the doors are just too big and heavy and are thinking of doing a grommet type curtain thing. What kind of fabric and window treatments should we use on his windows and closet that will go with the wall coverings? I'd like to keep the honeycomb shades under the window treatments since they're such great insulators. How about a fabric like Duralee #42006, since he pretty much likes strong geometric prints?
Without having both fabrics in front of me - I cannot tell if they would be a good match. However, in keeping with a beachy airy atmosphere - I would use a light linen fabric, like this white one below from West Elm. I would then add some blue to it. You could put a blue tape down the edges, or an 18 inch blue border at the base. I like the feel of the crisp white linen with the grasscloth. And I like bringing in a coordinating blue, without being too similar to the bedding. The white in the sheets will pop out.
I was also thinking of putting a mirror over his dresser, since he has the smallest bedroom out of our three kids and it would make his room seem bigger - would the mirror from Uttermost work above his dresser horizontally?
I would not- the mirror would be wider than the dresser- go with one like below that is a better size for the dresser. 
I also noticed in the Tommy Bahama picture that the room has wainscoting - should we do that in addition to some crown moulding? Can we paint the crown moulding and baseboards black or some near-black color?
Yes- you can paint the base and crown black- include the insides of the doors as well if you do. If you do this- I would not include wainscoting - as it too would be black, and that would not be a good contrast for the wood bed. I would only do wainscoting if you kept white mouldings - which I think would look great. The more woodwork the better in most cases. I have to say I am leaning toward white in this room, even though frequent readers of my blog know that I love dark baseboards... I forgot to mention that he also wants a ceiling fan, which I think would work with his beach-oriented room. He likes ones from Minka Aire and the Modern Fan Company. Should I get a new bookshelf, too?
I like the streamlined look of their fans. This is a nice contrast in materials and keeps the room from being too themey with a woven material fan. Don't have this be the only chrome in the room. The lamp I selected for you - from Uttermost, $199 - combines your chrome with an earthy feel. 
Below are pictures of his room and a scan of his floor plan (ignore the blue paint samples - they've been hanging there for almost a year!).
The pictures were not in a format that I can use - if you'd like to re-send them in a j-peg file attachment - I would love to have them in the post. We have 9' ceilings, and the map over his dresser is 4' wide and 3' high (I put it there to see how big of a mirror we might need). Thanks so much for your help! We promise to send pictures when we're done (although it may take a while to get everything done!).
As it does all of us... sigh..
Angie