7 tablespoons of rice cereal would give about 70 calories over 24 hours where as an extra 5oz of milk would give 100+ calories - and it has the nutrients and fats that rice cereal doesn't. That's more than 21 teaspoons of solids which is a huge amount for a 3 month old baby to be getting, that has to be impacting on his hunger for milk
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If your Paed has always advised to use cereal as a thickener he may not be aware of non-food thickeners (like Simply Thick in the US, Carobel in the UK, there are others available). UK advice is to never add anything to a bottle feed because of the choking hazard.
He is on a fairly low dose of zantac so there is room for it to be increased - both my kids needed the full 4mg per kg for it to be effective and that's pretty common, it's also very weight sensitive so does need to be increased quite frequently. We used a reflux formula which thickens in the stomach and found the avent 6 month+ variflow teats to work the best, they have 3 'speeds' which you control by turning the teat.
Laura