As mentioned in the comments, the official transcript will not give any hints about the failed exams, so future grad school admissions should not be affected.
Your son would do well to speak frankly with his references. Probably their own good judgment would lead them not to mention the false start to a PhD in their letters of recommendation (for either PhD or employment). But it wouldn't hurt to verify that they will take this approach.
With academic references, my impression is that there is generally no follow-up phone call. But for employment, which I believe was originally one of your concerns, it is fairly common for the potential employer to phone a reference for follow-up.
Thus, it is possible that in such a conversation, the failed exams might come up... although I would guess that the probability of this occurring would be about 10%. (This really is just a guess.)
Now, typically, the sequence goes like this: you send your CV to a promising job announcement, they ask you to interview, maybe there is a second interview, if they like you they check your references, and then they make you an offer. This means that if the false start is discovered in the reference check step, and you didn't mention it in the interview, that might raise a small red flag for someone in the company.
Therefore, it might be a good idea to mention the false start in the interview, to be on the safe side.
It is nothing to be ashamed about, however. I'm only suggesting this because companies sometimes get a little uncomfortable when something that comes up in a reference check wasn't mentioned in the interview.
I have a parent-to-parent comment (this may already be obvious to you, but just in case it hadn't occurred to you already): the conclusion you came to, that great sentence about who failed whom -- very well put! And now, having found the perfect bon mot, and having shared it once with your son, you'll want to relegate the failed exams to the role of the elephant in the room that you don't talk about. You should also be careful not to talk to others about them in your son's hearing. That's probably the most helpful thing you can do at this stage.
It will be easier for you to stay away from that topic if you consciously steer your thoughts elsewhere every time the thought of those exams starts to creep toward the front of your mind.
(Of course, if your son introduces the topic, then it's okay to talk about it with him.)
Do you know the joke about the mother on the ocean liner who needs to sound the "Man Overboard" alert as quickly as possible, but she is so bursting with pride that she sacrifices speedy action because of her need to brag? "Help, help! My son, the doctor, fell overboard!"
Okay, so maybe you won't be the mother of a "my son the doctor." But here's the silver lining: chances are, you'll become a grandmother that much quicker now! (A PhD can really slow you down with other aspects of life.)