1. Yes, it is common for folks with expiring I-94 (due to early passport expiry) to go to PedWest POE in San Ysidro, California and obtain a new I-94 to match the visa/status expiry date. Same situation as your son's TD status. (bring original long form birth certificate, father TN status, etc). The CBP person we talked to was surprised to see people come from far away to update their I-94 at San Ysidro.
2. Park in nearby paid parking lots (or park in nearby outlet mall parking lot and shop at the outlet mall before going to border to avoid parking ticket), then walk to corner of Camino De La Plaza and Virginia Ave (google maps is correct, but google satellite view is out of date as of March 4 2019). Walk south towards Mexico, you pass a bus stop/bus shelters, then as you approach the Ped West facility on your left, you will see a sign "To Mexico", and yes you can walk into Mexico then turn around. or you can do what me and my family did, was just enter the back of the building. You will see a steady stream of people leaving the building (from MX entering the US), to the left there is another door which you can enter and buy I-94 card and get updated stamp. There will be a CBP officer there to answer questions, and to you ensure you are in the correct lineup. There are three lines. One for Sentri pass, one for pre-paid I-94 and one general line for everybody else. The general line is the longest and was over one hour wait for us on a Saturday morning last year (in Feb 2018). I recommend you buy your blank I-94 card online ($6) the day before and bring receipt with you. This way you can go in the shorter line up. Based on my experience no need to actually walk into Mexico.
After your get son's updated TD status, please post your experience on this forum to put this rumor to rest. I also heard the rumor you must walk into Mexico, but it is not necessary. But this event will be recorded in their databases as an entry into the US. So in the future if you are ever asked in person on USCIS form, what is your latest entry into the US, it will be this entry into San Ysidro, CA, POE.
By the way, nothing against Mexico, as I did investigate to have lunch in Mexico with my family, but the main touristy restaurants in Tijuana are in the downtown section and not walking distance from the border. Tijuana is a relatively safe city as long as you stay in main touristy areas and practice common sense (daylight hours). Let us know how it goes....