Dyslexia is a very broad term.  It is more than just seeing letters backwards.  There are several great resources out there that your public library probably has.  I have read Overcoming Dyslexia: A New and Complete Science-Based Program for Reading Problems at Any Level by Sally Shaywitz M.D, which was excellent - at least form a teacher's point of view.  There are also several video clips on YouTube, just search dyslexia. (Below is a link to one about famous people who are dyslexic.)  

Since I don't know how old your son is, you may want to check out the Hank Zipzer series by Henry Winkler (written on a fourth grade level).  Even if your son is younger or older than 10 or 11, you can listen (read by Henry Winkler himself) to them  together and then discuss.  Henry Winkler is also dyslexic and many of his stories are based on his own childhood.

As for labeling your child...  Well, I myself have dyslexia.  I was diagnosed when I was 15.  My parents and I knew I had a reading problem, but the school couldn't seem to fix it.  It wasn't until I was properly tested that they knew exactly what my strengths and weakness were.  I have to tell you I was relieved to know I wasn't stupid and what was wrong with me had a name - and it was treatable with proper instruction.  My parents were great.  They concentrated on developing my strong points and kept chipping away at the weaknesses.  It took the whole family and a lot of work to get me on grade level.  I still have weakness - one of them being spelling, but I've learned over the years that I'm good at certain skills such as listening.

In my personal opinion, I would fight to get the 504.  Your son has rights such as untimed testing and getting services such as remedial reading if he qualifies.  Those services may make all the difference to his outlook on life and his future.

I know I got carried away a bit on this answer, it just hit home.