There is an archetypal need among children to know about weapons. This one seems both harmless and great for hand-eye-mind coordination. I have no problems with a twelve year old with this item. Where I come, a child must only be twelve to get a hunting license, and shoot real guns.
I admire the skill, I've seen him practice and he is good and getting better by the day. What I don't particularly like is that he is young and you never know what could possibly go wrong if he tosses it the wrong way or another kid gets in the way while he's demonstrating hi talent to his friends... I'm not saying he'll grow to be an assassin, I just don't know whether it's a healthy toy or not.
I understand. I know that the Rudolf Steiner schools encourage children to become familiar with some toy weapons, such as swords, and consider this to be good for the child's development as a human. They also teach the children to knit and play string instruments. Perhaps our more prevalent notion that all weapons are bad is harming the children more than letting them play with a toy knife. If he is skilled, he will not harm anyone. I'm sure some of the other parents will object though - I know I had quite a time from other parents when I let my son play with a toy gun someone had given him, or even to watch WWF. What a mess! I;m sorry you are in this position.