Hello, Heidi! A few things to consider:
1. Don't forget that you can begin in the "middle" of a level of dictation passages. If you feel your son knows the first half of Level 2 really well, then by all means start in the middle somewhere and just continue on from there.
2. Also consider, though, that dictation is not just about spelling words correctly; it is also about correction punctuation, sentence structure, concentration, memory, and imprinting the correct spellings of words in one's mind. My ds can spell most of the Level 2 words if I gave them to him individually, but I know he needs practice with putting together sentences and not letting his attention wander.
3. One level of dictation does not necessarily equal one school year of work. My dds are doing Level 4, and with nine weeks left to go, they have finished 43/103 passages. I don't see this as them being "behind".. they are simply taking the time needed to really "get" the words and sentence structures. Their outside writing has improved so much this year, and they have learned how to punctuate quotations and complex sentences simply by consistent dictation exercises.
These are some things I needed to mull over last summer, so I hope they've been of at least some help to you. I wish you well in your decision-making!
