Yes, your child will be eligible for upgrades, just like any other Medallion member.

You might have some headaches, though, if your boy is on a separate PNR--keeping your selected seats together on TATL flights, making sure you're all treated the same if flights are interrupted, etc. We often can't fly all together with the kids for the full itinerary but have found that having the toddler on the same PNR with at least one parent can save some hassle when things go awry. (I don't know why it is that Delta/KLM ALWAYS seems to randomly reassign my seat when I'm flying back from Amsterdam, but they do.)