Disclaimer: I was perfectly honest here, and that might be a bad thing....
Being born and raised in the South, I know that children are brought up saying it as a sign of respect for elders. However, it stays through adulthood and becomes simply a sign of respect. I use it all the time and never once make a distinction in my usage based on the age of the recipient. I refer to women "clearly" younger than me as ma'am. I refer to women older than me as ma'am. I ALWAYS use it when dealing with a Southern woman because I know it is appropriate and appreciated. However, as I have gotten older and because I have some customer service in my job that has me speaking to people all over the country - I have mostly converted my "Pardon me ma'am...." into "Pardon me miss...." Honestly, the primary reasoning behind this change was to appease hyper-sensitive Northern women that think I am calling them old when I'm trying to be polite. I believe it is the only PC change I have ever made in my life.
Being from the north, I can see how you would get confused. Instead of, "Pardon me ma'am, may I get past you?" you are used to "Out of my way, bitch!"
Personally, I would prefer the former.
So, if it were me - I would allow the child to continue to use ma'am, even with you. After all, he is being raised properly for his region and will encounter FAR more Southerners than Northerners. If you have him try to make an exception with you, you could confuse the issue for him and discourage him from using it. He won't understand where to draw the line. Regardless of how you "take it", he means it as a sign of respect. Good for him and his parents in recognizing the importance of manners!