Indeed, your son is pushing it a little with that setup, both on the motor and at the ESC. According to the ModelMotors website, www.modelmotors.cz, the motor draws 8.8 Amps on a 3S LiPoly with a 9x3.8 prop. Current goes up proportionally with prop size, so be assured that you're drawing signifigantly more than 8.8 Amps. The battery should be just fine though. You can make an educated guess as to the current pretty easily by extrapolating from the existing data on the charts. I'd estimate in the 11-12 Amp range (ouch).

Downsizing the prop is the best way to cure an overcurrent problem. Some people use throttle management if it's "close" (and some even if it isn't all that close...), that is, they limit their full-throttle runs, using it only in short bursts, but that's hardly the best solution.

Geared vs. outrunner is mostly a personal preference, though many people are thinking along the same lines as you, and are choosing the outrunners for their simplicity and robustity (is that a word?). Overall, efficiency is close to a wash; geared motors' efficiencies are listed for MOTOR ONLY. They don't take the gearbox, which is only 80-90% efficient in and of themselves. The main advantage to a geared motor is flexibility. Outrunners are more like glow engines in that they're limited in the range of props they can spin without drawing too much current. On a geared system all you have to do is change the ratio and you've opened up a whole new range of props.