From what I have heard, you should also keep an eye on your baby's psychiatry as he grows older. I have a good friend with some dark birth marks on his upper back... at 16 when he was committed to a mental hospital, the nurse there was shocked that his doctor never said anything about the marks. They can represent some major chemical imbalances inside the body, in some cases. Don't be scared; be aware and hopefully by now you've found out what's going on.
What you're describing is a rare and difficult problem. You should take your son to a major medical center for evaluation by dermatolgists and plastic surgeons. Specific answers to your questions are best answered in person by physicians with experience dealing with this condition. Complete removal may lower the risk, but may not be feasible given the size of the mole.
Good luck.