While I did show my boys outfits that looked nice together, colors that coordinated, and helped them to understand the difference between dress clothes, school clothes and play clothes, I did pretty much leave their fashion choices to them. They've done just fine.
We do have a couple of rules: No wearing visibly dirty clothes unless it's for play, and no leaving the house in pajamas unless it's pajama day at school.
Now, all that said, regarding your sweet son's outfit: While it might be cute in preschool, such a "loud" outfit would be a distraction in grade school. So, in teaching him all of the above, I'd also talk with him about moderating his look for school a bit. Perhaps just the rugby shirt, jeans and crucifix, and then he could put on the other stuff to wear at home.
Making fun and teasing can start anytime. But I wouldn't make that the reason for modifying or moderating his style.