Should I let my 12 year old throw knuckle balls?

The way you put things, you should definitely have him continue working on his knuckleball. Don't get me wrong, though -- he shouldn't be relying solely on the knuckleball for everything, and a good fastball combined with a knuckle is a fearsome combo. I think he should work on both if possible, but if one has to be canceled out for the other, stay with the knuckleball.