Most colleges do care about the level reached. Completing the AP level course will satisfy any level reached requirements or preferences.
Some colleges also like to see more years completed while in high school. However, this is not always obvious from their web sites. If that is a concern, then taking AP Spanish literature or a college Spanish course based on his placement (many colleges will use AP Spanish scores to recommend placement) would help for that.
If starting a new language in 10th grade, it is probably best to continue it through level 3 (or level 2 at the minimum) in order to make a difference to a college admission reader.