I think you're on the right track, bike-wise. The big-box bikes just aren't very good, plus won't include a proper setup, not to mention any kind of follow-up service and tuning, which all bikes need after they have been ridden for a few weeks. Of course, you pay more for bike-shop wheels, and of course any ten-year-old is apt to outgrow it pretty quickly. So that's a factor as well.
One excellent choice would be Giant's MTX 250 ($290; www.giant-bicycle.com). It's a kid-specific bike with a frame design that's easy to step over, plus 21 speeds controlled with grip-shifters, which are a little more intuitive than thumb shifters. The MTX 260 DS moves up to a dual suspension for $330, but I'd stick with the hardtail. Simpler, lighter, probably easier to pedal for a youngster. REI also makes a good bike for younger riders called the Novara Moxie ($249; www.rei.com), which like the Giant bikes has an aluminum frame and Shimano components. It has 15 speeds, which I tend to think makes more sense for a young rider. That's just easier to manage. Finally, K2's Zed ($219; www.k2bikes.com) offers a really good buy in a bike with reliable components and a front shock. But, overall I like the MTX 250—I think it's a bike a kid can really love, and it's not too hard on your budget.
As your son grows, provided he keeps riding, take a hard look at used bikes from people whose own kids have outgrown them. You'll save 50 cents on the dollar or more, meaning your son can get a much better bike for the money.
Don't forget that helmet for the noggin, either! Bell's Cognito is just the ticket ($35; www.thebellstore.com).