Hi J.,
My daughter's birthday is also late in August. We allow her to have a big party every other year. Her "big" birthday party happened when she was in first grade. We just moved her party up to June instead of August. It was just easier to invite the kids she wanted to have there.
The positive thing about waiting until after school starts are that you might not have to invite as many kids, unless your son has play dates with all 13 kids during the summer. Also, if you are going to make up gift bags for the kids, you can always find school supplies for cheap.
As for the kids your son invites to his party, I didn't invite every kid in the class. This might draw ire from moms, but there were 24 kids in her class, and I just couldn't see having kids she didn't even play with or particularly like at her party. However, you might want to check with the teacher. I have heard that there are some schools that have a policy about this. We were, of course, discreet about the invites and I reminded my daughter to be courteus of her other classmates in the process.
I held my daughter's party at one of those bounce house places mid week, on a minimum day. The downside of that was that she was exceedingly tired after the party and kind of cranky as a result. Still, almost all the kids were able to come, which was great.
Good luck with the party, and with whichever way you choose to throw it. Your son will have a wonderful time with his friends no matter what.
Take care,
L.