How about reducing that mid-day bottle over a few days? Dropping 8oz may be a bit of a shock for him so I would cut it back bit by bit and offer water after. You could drop 2oz at a time, so 6oz for a couple of days, then 4oz etc. The other thing to try if you are doing so is to offer his milk in a sippy in the morning and at meals as they tend to drink less at first. Again, you can go slowly, let him get used to milk in a sippy at mid day first, then swap the morning bottle to a sippy.
I'm also going to move this over to eating for toddlers which is a better place for it now you have a toddler on your hands!
Laura