i usually have the same responce with my students the first year theystart to shoota bow. through out the class they realize the importance of ethics and morals and would never concider trying to hunt with a group that is not worthy.
a 10 inch group isn`t all that bad if it is consistant. it sounds to me like he needs education on how to improve his ability and perhaps even fine tuning the bow.

stear him in the direction of a profesional or at least someone willing to teach more then the basics. then give him a day in the woods hunting small game to keep his interest in bow hunting. he will see the difference in shooting a target compared to an animal. more then likely the idea of hunting big game will be a reality check when he can`t hitgame at a more relaxedstate.

telling him he can not hunt with you because he is not good enough, may make him go anyway with out you or with someone else of his ability or worse.

educate the kids fully before you turn them away.

PT