You choose what "rules" you have for him to start; what pins are off limits for trading ("keepers"), such as the ones you buy that are more expensive, that is the more "collecting" side of pins. Then, choose which ones you would like him to trade; it's always a good idea to look at prices and figure out the unit price. Lately if I actually want to trade I'll buy either the single mystery pins, or mystery pin packs.
The big pin stores are the main place you may find other guests trading. For example, there is "Pin Central" in EPCOT.
Yes, he can trade with any Cast Member that has a lanyard and/or a pin board of some sort.
The unspoken rules are different depending on who you ask. But, the regular rules are; the pin you are trading needs to have a back with it, and usually make sure the back is on it so it doesn't poke anyone, you're supposed to only trade 1 or 2 pins with the same CM per day, and guests are only supposed to trade official Disney pins with the CM's. Trading with other guests is different; other guests can refuse to trade if they don't like the trade, CM's will trade any valid Disney pin.
If you want to avoid "scrappers" or fake Disney pins, the only 100% way is to buy the pins from an official Disney source, but if you are trading CM's it's hard to avoid, as other guests will bring in scrappers and trade with CM's.
ShopDisney has pins on there if you want to order some ahead of time.
Have fun, but be careful, those little pins add up! lol