Is it possible to create a Child Apple ID using his existing email address, and not have to use the XYZ@icloud.com?

I Have this same question. Answer appears to be no.

No the child account must be created from the Family Sharing.

Child accounts and just iCloud account have different rights, when created.

The rights can not be modified to convert a normal iCloud account to a child account.

Family Sharing and Apple IDs for kids

http://support.apple.com/en-us/HT201084