I would say he should certainly be very excited, it is very unusual. But you friend also needs then to calm down enough to get some clarification about the basis on which this is happening. The agent's obviously having a first flush of huge enthusiasm - which is great - but your friend needs to make sure that the agent isn't just trying a few bright ideas and will then drop him if they don't come off. Phrases like, 'do we have an agreement?' or 'I take it you're offering to represent me?' are nice and not too aggressive sounding, but should get a proper commitment from him. They need to be followed by a long conversation about where the work's beomg sent, what his plans are for the next stage if the first round of submissions doesn't get a sale, how your friend should best be working on the rest of the book, what the agent does about subsidiary and translation rights, and so on.
You say the agency is reputable, (has he checked them out on the preditors and editors website?) but your friend still needs to cover his back. He needs a contract or agency agreement, which he can then use to join the Society of Authors and get them to go over it with their legendary high-speed fine toothed comb. They turn them round in 24hrs or so, by email:
http://www.societyofauthors.net/index.php4.
The S of A also has a leaflet about agency agreements for a pound or two. There are still a few agents - mainly the one-man-bands - who don't really do formal contracts, but your friend still needs a clear conversation - which he can make notes of - about how it's all going to work. It's also worth checking if the agency is a member of the Association of Authors' Agents. There are good agents who aren't, but the AAA has a code of conduct which is reassuring.
Miss Snark has a lot about agents on her blog, being one herself, and the archive might be worth a look for some ideas about how agents should and shouldn't behave, and how they actually do. It's funny, too:
http://misssnark.blogspot.com/
Sorry if this sounds like raining on your friend's parade a little bit. The work's obviously terrific, so I'm sure all will be well, but it's as well to know that everything's in order.
Emma