Thanks for the advice guys. Just to add a little bit from what I've read in your responses...
The kid doesn't seem mischievous at all. He seems like a 12 year old boy that likes digging and playing ball and all the stuff we used to do before video games replaced a lot of it.
He also seems determined to use rocks. I don't think there is any chance of me getting him to use tennis balls. Last night I tried to get him to throw one and he kind of looked at me like I was nuts.
I drilled him a lot about the fact that this is a dangerous weapon and he could kill someone or break a window but who knows if he will take it to heart. I know I didn't when I was his age and I wasn't capable of understanding what "It could kill someone if used improperly"
really meant. But I guess not many 12 year olds are. I mean I didn't go on a slinging spree or anything but I was pretty innocent. Here's to hoping he's more wise then I was.
I think I will go over there but mostly to make sure they know he has it and are ok with it. I don't want to scare anyone away from slinging. A slingshot could kill someone after all and those are considered kids toys. So I will let them know it's like a slingshot in that it can cause serious injury if misused but can also be used for fun.
America has become so sue happy, like Ishi said; it's ridiculous. I just want to cover all my bases and make sure he actually explained to them what it is he was doing. But I won't be trying to scare them about it.
Again thanks for the advice. Every response was helpful.