I do agree that his citizenship does not depend on action by the U.S. Consulate in Canada.
Anyone who wants a U.S. passport has to apply for one, but no one is required to apply for a passport or a CRBA.
If a citizen wants to travel outside of the U.S., he needs a passport. Otherwise, he doesn’t.
Not having a passport or CRBA will definitely make it difficult to register for school or get any government benefits.