Jennifer is right on the money. He definitely needs special help and it is up to the parents to INSIST on that help immediately from the pediatrician. This little guy needs help and now.
Re: thickening his formula with more powder and less water - that can be very, very dangerous. By doing this you are giving him too much concentrated formula and not enough water. This can easily lead to other health issues because his body is having to work extra hard to process the food without the necessary hydration. I strongly recommend you stop now. I am a Lactation Consultant and feedings are my specialty. The PT who suggested adding juice and applesauce advised you quite incorrectly - those are not safe either.
Listen, I deal with Peds who don't listen all the time. It sucks and it is WRONG. But this is where the parents need to insist on getting help and if the current Ped won't help, file a formal complaint and get another one who will listen. Go outside their health care system if they have to...DEMAND assistance. Feeding issues are nothing to mess around with and you are right, just because he is gaining or is in the 50th percentiles doesn't mean what he is going through is normal.
I wish you much luck on this...but please stop over concentrating the formula - it isn't actually putting weight on him...but it can definitely cause other health related issues.