Coach, I skip'd the closed reel and kid rod/reel combo's all together and started my little guy out with the ultra mini set up.
I think his is the Shakespear reel (holds like 180 yds of 4 lb. test mono) and the little fish rod (If I remember right, cost like $14 for the rod and $19 for the reel). It's the perfect size for him (little over 5 yrs old).
I just passed him down his first big boy rod/reel combo (Penn 4300ss and a FLW IM6 6 ft graphite Walmart Special type rod). Little pricey for the reel.. but the rod I think was under $20.
for a good all around combo, I'd take a look at the Okuma AV series reels!!, they're great! I use the AV80's for casting and plugging and the big reels are only $35.. the smaller reels in the 8-10 lb rating. Match a Okuma AV-20/30 and a Shakespear rod (ugly stick)or Berkley lightning rod should be a good quality rig for a young man. Whatever would be managable for the boy size wise and is comfortable for him.
Here's the AV series Okuma
http://www.sportsmansguide.com/cb/cb.asp?a=75636
just my .02
here's a pic of the boy with his ultra mini set up: