Yes, you can buy minifigures by themselves now. In the stores they have a station where you can assemble your own (I think it's $10 for 3 custom minifigures). And they have an assortment that's prepackaged--it's a bit of a mystery as to what you'll end up with (it's a very small package, so it's probably just one minifig, but there's at least a dozen different minifigures in the current series).
I've also got a 5yo Lego maniac. We started off with a bin of Duplos when DS was 3, which was all freeplay (and he still plays with them). Then when he was almost 4, I bought him a big clearanced Indiana Jones kit with his Christmas money. I knew when I did it that I'd have to help him put it together. The first time he was happy to watch me do it, and it took about an hour and a half (for a 565 piece set). Later in the week, after putting it together every day, I was down to 45 minutes. (DS loves to build, play with, then destroy, then freeplay.) Since then, we've bought him a lot of Lego kits. I was so proud of him the other day when he sorted out all the pieces from a new kit all by himself (I was out running errands).
DS loves to have me help him, but nowadays that means I get the next pieces ready for him and he puts them together all by himself (when building a new kit). My favorite part of building Lego kits is sorting out all the pieces by color and shape in the beginning. So we work very well together. DH hasn't spent nearly as much time building w/ DS, so when he does help DS, DS tends to get frustrated b/c DH wants to do it all himself, but DS prefers to do most of it. It was a lot of fun putting together the huge Shuttle Adventure kit b/c all three of us got to sort and put together different sections, which made everyone happy (of course, it took over 4 hours of building time, but there were over a thousand pieces).
And DS literally plays with Legos for hours every single day...and it's probably 90% freeplay, building whatever his imagination desires, or he's inspired by on YouTube.
So I'll echo everyone else who advised you to get your DH and FIL to leave your DS alone while he's building...or at least remind them (as frequently as necessary) to let DS do it his way. Using the right color really doesn't matter--but it took my DS a year before he was able to accept that.