Another problem is that with little guys in the batter's box, they tend to turn their back to the pitch if it's anywhere close to them, and step towards the catcher, i.e., they don't know how to get out of the way, and actually step into the pitch. Some of them are probably getting hit by a strike over the inside corner!
With my guys I have the catcher set up over the outside corner in this situation. We try to get the pitchers all tuned to focus on the catcher's glove from day one. This has helped minimize hbp's because they're trained to focus correctly. It's also nice that in our league the umpire is supposed to give the pitchers one ball's width on each side of the plate. When done correctly, it's fine. Sometimes, though, the ump gives the pitcher too much on the outside, and the batters can't reach the pitch, but that's another story.......
10 yo's are tough, though. Their psyche is so fragile. I know you're staying positive with him, and from a Dad, that's really the best medicine!