If it's an orange saber (by which I mean, an orange named item, NOT a saber with an orange crystal... often given out as quest rewards, such as your initial lightsaber) the item level is determined by the mods within it, not the item itself, so he can freely build himself a more capable saber that works within his alignment restrictions.
By the sounds of it, he BADLY needs to upgrade his hilt (IIRC, this is what determines the current level of the item).