tak2lmt, I just wanted to emphasis something that has been said before: they can be very resilient. We have seen animals in far worse shape brought back to live healthy lives.
I also wanted to address the issue of your son. I understand that this is his animal and you are stepping in (being a good Dad) to help put things right. It's been suggested that your son should not handle the animal. I think that's too restrictive. I would say your son should not handle the animal if you or your wife is not in the room with him at the time (not just in the house).
Really, they don't want to be handled much anyway, but if you want to have your son get him out and let him crawl about the hands and arms for a bit a couple times a week, that's okay. Just make sure there's adult supervision. You need to be watching for signs that the animal finds this distressing (dramatic color change, going very dark, showing vibrant patterns, hissing) and if that's happening, the handling should stop.
While resilient, they are also fragile and stress is one of the most dangerous things for them.
Also, make sure your son knows the drill on washing up after handling the chameleon. Any skin that's been touched at all by the chameleon should be washed with an anti-bacterial soap. I could make a case for changing shirts (maybe have a "handling the chameleon" long sleeved shirt that gets pulled on before the chameleon comes out of the cage?).