I would have to agree with margypops you really should contact your Doctor to see what he or she thinks about this.
I see you are his Dad , does he do the same thing when his mom is around , it does seem very young for this kind of behavior I dont think you are paranoid I would check out who he is alone with ..it sends a red flag up to me ...it may be a good idea to ask your Doctor what he thinks ...
I would ignore it for now, kids this age explore their bodies a lot. But I would tell him that the toys could hurt him and then he may have to go to the hospital if he continues using toys to do this. Then just ignore it for awhile and see what happens, hopefully he will get over this fascination. Take care.