Grade 1 and 2 really isn't that bad. If you are careful about his jumping and it doesn't get any worse, he shouldn't need surgery. This is an excellent article on luxating patellas:
Medial Luxating Patella
I use EicosaDerm for fatty acids/omegas. I get it at Entirely Pets. Cosequin is much cheaper there, too.
"DermaPet" Eicosaderm 8 oz (230 ml)