I can totally relate poco. I made that call with Woodstock after a tendon injury, it was an agonizing decision. His tendon is healed but I'm glad I had him cut. Being cut late (he's 5), he's still quite the beefy looking guy and I love that. He should make a really nice gelding for my daughter to show a few years down the road. I'm sure your son will appreciate your decision. I remember counting down the days until I was 18 so I could show my grandpa's stallions. I still own the first one I showed, he'll be 30 this year :)
I wouldn't say he'll be happier either way as I have 2 stallions and they have it just as good. They aren't seperated, they each have another horse pastured with them and can share fences (though hot) with everyone and they get along fine.
Life is like a camera. Focus on what's important, Capture the good times, Develop from the negatives and if things don't work out, Take another shot.