If I were just coming into the market i'd be really tempted to get a 400 instead of a 250 as well, so I can certainly see where he's coming from. I guess it sort of depends on what type of person he is. If he races everywhere and is likley to get stopped for speeding or other offences then its probably best to get a 250. If he's sweet with following the speed limit 99% of the time and only opening it up occasionaly, the money he'd save by buying a 400 should cover any fines that he might get. I rode the SV on my restricted for a few months because i didn't want to shell out for a 250.
As for the power thing, if he has respect for his machine and isn't naturally ham fisted he should be ok.
"They say that if I do bungy jumping too much, I might get brian damage."
"I don't even know who Brian is"
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