Speaking as a game developer, this is remarkably bad advice for a young gamedev to follow. It doesn't matter whether or not they're "his". It matters that he continues creating. That's the most important thing. He's not making money off of other people's work. He's building a skillset that will serve him for a lifetime. Wasting time fitting society's arbitrary moral standard is time not spent becoming a better gamedev.
Even if he's served with a DCMA takedown notice for some of his apps, it doesn't matter even slightly, because the app isn't the end goal. Talent is. And the way to foster talent is to not stop working.
I'd encourage him to pursue art if he wants to, as it's also a skill which will serve him the rest of his life -- the creators of Minecraft, Super Meat Boy, and World of Goo were all artist-programmers, which seems more than a coincidence -- but it's not a requirement to be a gamedev.
Second, If, as you say, the app isn't the end goal, then don't release it and this issue doesn't even come up.
Third, you said "Wasting time fitting society's arbitrary moral standard is time not spent becoming a better gamedev."
As a parent, that is exactly why I would encourage him to create his own characters. It's not at all an arbitrary moral standard. Is theft an arbitrary moral standard? Plagiarism? If you don't have permission to use the characters, don't use them. These games are available on the official MS site right next to the official ones. Why go down the path of having to potentially have your account suspended, or whatever the punishment is if MS decides your apps are infringing.
Finally, What do you tell the kid the first time they have a successful project and someone rips it off? Don't get upset, you did it when you started, so it's ok? It doesn't matter that he's just getting his start, stealing these characters is just like stealing the source code an releasing it as your own. Are we condoning that as well? In my opinion, it's just as important to learn integrity as it is to build the app.
There are enough issues with writing your own games, you have just made it that much harder.
Of course there are also lots of free assets out there for use, but designers are more hesitant than developers to give stuff out for free.
Anyway, it doesn't matter if his apps are taken down, because growing his skillset is the most important thing, not the apps themselves. No one will fine him or take him to jail, so as long as he's aware that maybe the app might get pulled, then using other people's characters is the best possible thing a young gamedev can do. And plus there's a good chance no one will care.
I encourage my kids to yoink assets for their projects. Once you've succeeded a bit, and feel comfortable with one piece of the puzzle, by all means, work on the next and make custom characters and graphics. It is non-trivial skill and experience, and come later.