It depends upon the context — for example, a teacher might be delighted with the boys for applying themselves diligently to their studies, but not love them. (This is a case where translating aoibhinn by the colloquial meaning of “love” as an emphatic form of “like” provides an ambiguous result.)
I don’t think that Is grá le X is an idiom used to communicate familial love — Tá grá aige do na buachaillí would be a likelier construction.
Just to elaborate: the construction with grá can't be used to mean a 'strong liking', which is how I interpreted this sentence.
What part of "aoibhinn" denotes the "he"?
No part - aoibhinn means delightful. The "he" is to be found in leis.
leis = le é = with him.
Literally and positionally the sentence is "is delightful with him the boys". It is intended to mean that he delights in the activities, fun, sport, amusement, antics of the boys. However I disagree with the use of aoibhinn here. Is aoibhinn le is applied to something intangible not to a material thing.
Is aoibhinn beatha an scoláire
Is aoibhinn liom éirí na gréine
Is aoibhinn liom an áit seo - not the physical place itself but the sense of serenity, the sense of wonder, the beautiful view, etc it might give you.
Is aoibhinn leis cuideachta na mbuachaillí (He delights in the amusement of the boys) would be better.
To express love (affection) for the boys one could say Tá cean (cion) aige ar na buachaillí
or Tá sé ceanúil ar na buachaillí