While I don't necessarily disagree with anything posted already -- you're instinct is probably your best guide -- I do want to pose a few other thoughts.
First, $129 per month, as others have said, may not be too much for a quality school, depending on your community. Probably the biggest issue I would have is the "lock in" push. It might not be a marketing scheme (many businesses know they are going to have to increase rates because of elevating costs, but want to reward previous customers for loyalty)... but there's a decent chance it is, as well.
"Leadership" programs do not necessarily exclude young children. It depends on the nature of the Leadership program. In the school I attend, it simply means access to additional class sessions and some material that they will eventually learn if they continue to train towards their black belt. There are some 4 year olds that can handle the extra class time and material, there are others who can't. It's a judgement call by the parents. As to the initiation fee for the Leadership program, it's another judgement call based on the overall value you feel you are receiving.
Belt progression is a funny thing. It really depends on the tradition of the art involved as to how much of a break "easy" belt progression is. Some styles might find it sacriledge to have easy progression even in the basic ranks. Others might have a much more lax approach. One question I might have is whether or not these belt levels are honored or backed by a larger organization (national or international). If they are, why worry? Obviously the instructor has the credentials to grant legitimate ranks in his style. Another thing you can do is check out the advanced level classes, or have a friend more familiar with martial arts check them out. Do the advanced students seem to know their stuff? Or has the easy progression diluted the skill set? "Easy" progression has its uses in some MA instructors philosophies, and not all of those uses involve separating you from your hard earned money. It is, as mentioned by others, a potential red flag.
One piece of value that only you can judge is the quality of the instructors, particularly as they relate to teaching younger students. A good instructor for this age group can be very valuable to the development of not only good skills, but a healthy attitude and a life-long love of the martial arts. I was sorry to see one our instructors move on for that reason, he was great with the younger students.
As to the weapons, at 4, it may seem a bit early, but it really depends on the child and what they are doing with the weapons in class. I have a son, coming up on 4 years old in June, and he has already gravitated to many play weapons -- I think he owns about 5 or 6 play swords (if you include lightsabers). I have tried to get him to respect even these as he should a real weapon, most of the time with some success. Most of the time, he is very appropriate with his swords. I have little doubt that he would be able to handle the basic level weapons instruction we receive at my school at a very young age, particularly in the context of a structured class. After all, he already plays Miteball (T-ball for 3 1/2 to 4 year olds) and handles a bat appropriately and effectively.
All in all, from what you have said, yes there are a number of potential red flags. What I see lacking is the complete context of the information you have provided, which may shed more light on the situation.
Checking out their website (
http://www.ocasiostruemartialarts.com/welcome.html), I'm not quite sure what to think. I am often wary of schools that claim such a multitude of stylistic influences
"Kenpo Karate, Ju Jitsu, Shaolin Kung Fu, Tae Kwon Do, Kickboxing, boxing, Kali/Escrima, Muay Thai, Jeet Kune Do are just a few of the arts that have influenced our dynamic curriculum",
but it's hard to say. This would also mean that he's probably not backed by any larger governing or certifying body (as I talked about the belt discussion). As to his qualifications, I have no idea what an "Apprentice Master Instructor" is, or what he claims to have his "4th degree Black Belt" in. Having said that, in fairness, the school I attend has very little in terms of specifics on style or lineage on the (rather generic) website. But, if one visits the school, one will easily obtain specific information regarding lineage, certifications, and style.
If there are specific results that you are looking for, speak to the parents of other children in the program, and to the older students. If the results they've gotten are the ones you're looking for, that's probably as much assurance as you can get. If specific training in a traditional, recognized art is what you are looking for, this might not be the school for you or your son. The price point depends on what you can and are willing to afford.