Grandpa said:- can his animal companion stats be rolled (so he can eventually get a really rocking animal companion from good rolls)?
I think this is a bad idea...you as DM might want to assign slightly higher stats for a given animal (especially if for role-playing purposes, he selects a less than ideal combat animal), if the character went out of thier way to find the best specimen of the type he could find.
Grandpa said:- can his animal companion raise levels? (I'd like to implement this just to offset the first request, so I can "simulate" a bond of friendship between him and his animal.)
I don't think you should let an animal have levels, but I'd let it increase in HD...I've even let a druid use the awakened spell on an animal and still keep him as a companion (I know the sage has ruled against this, but I haven't found the fact that the animal is intelligent to be a problem...in fact it gives me the feedom to not have to micro-manage the druid character when he want his animal to do things that might seem too smart for the animal)
Grandpa said:- can he make armor other than hide out of critter skins (like plate mail from monster x) (he could use the AC, but is there a reason other than flavor for this restriction)?
Oriental Adventures has Bone Armor (light armor, Cost=20gp, Armor Bonus =+3, MDB=+4, ACP=-3 ASF=15% 20lb) and Leather Scale (light armor, Cost=35gp, Armor Bonus =+3, MDB=+6, ACP=-2 ASF=15% 20lb)...I don't see a reason why a druid could'nt have access to one of these armors.
If he want a better medium or heavy armor, I'd look at the rules for Dragon Scale Armor, but I might allow something similar for other exotic skin armors (say wyvern, or I have non-intelligent dragons (draces) in my campain)
As to the question of weapons, I personally don't like the religions restrictions thing about druids (reminds me of the things I thought we had gotten away from from 1e...I mean now wizards can use greatswords (and one of my wizards did...1st level Barbarian, with 18 CON, a toad familirar (20 CON)...I was the high hit point character in the campaign...and it was cool when the loin cloth wearing, great sword carrying character was identified as the party's wizard)...I allow them to use other weapons but only if they multi-class, took the feat, or got a weapon as a racial package (ala elf).