I would personally go ahead and start him on some grain...if he has open access to grass and hay 24/7 but still looks a smidge thin then a little grain would be ok. Its ok for him to not get it everyday. Many people only grain the days they ride. Also does he have access to a salt and mineral lick? If not getting one might also help his over all condition.
Just because 'many people' do something does not make it a good idea. Cereal grain, for eg, and other high starch/sugar feeds are not *generally* very good for horses. Period. If they are being fed infrequently, rather than little & often(at least 2-3 feeds daily), this adds greatly to the likelihood and severity of problems caused. There are other healthier, safer feeds to use if you can't feed little & often. Please learn about horse's digestion & *healthy* feeding practice & feed types if you're going to offer advice to others on the subject. FeedXL.com is a great place to find good info about equine diet & nutrition. It's also great value & has actually saved me money. On that note, on analysis, you will also find that salt & mineral licks provide little besides salt, so whether or not you're using them, you'll still need to supp to provide the horse with balanced nutrition.
He also gaps his mouth open with the bit in his mouth alot, actually almost constantly. He chomps on it, even got the sides of the bit in his mouth while lunging. Is the bit too loose? He use to hate them and wouldn't allow me to put it in but after winter with doing a lot of trust exercises he allows me to put it in with a little persuasion. I wish
Yes, I guessed he was a 'star gazer' from his neck development. Probably he resisted the bit for whatever reason & they hung off him with 'heavy' hands, causing him more grief & to hold his head in the air. This would have also effected back muscles, which could have led to other injuries. I am assuming you've had a dentist attend to him? This behaviour could be due to a sore mouth, or 'programmed' behaviour from previous pain, or just from bad training & handling. I'd personally ditch the bit, at least until he's going very well in a halter or bitless - remove the pain, or memory of it from the equation. If you want to get him going well in a bit, leave that until later & introduce it very slowly in baby steps.
Including obstacles - poles, small jumps, weaving between stuff, etc is helpful for building horses in absence of hills & hard work.