Arablish and other signs of a reader

Karim gets very excited about letters and words and is always pointing and asking "what does that say?". After passing a few stop signs and asking about the letters he has come to memorize the word. The funny part, though, is that he seems to be mixing his Arabic skills in and when spelling he says, "P-O-T-S: Stop". I also noticed that it is not just the stop sign he has memorized, but he has actually figured out the combination of letters and can recognize the word stop in forms other than the stop sign.
Then, the other day, I showed him a flier for the zoo and asked him if he knew what it was. He looked it over and pointed to the word zoo and said, "this says zoo". I'm still not sure how he figured it out, I know he can't actually read, so I'm guessing he's seen the word somewhere else and like stop, has memorized the combination of letters. Either way, these are both good signs that he is understanding and on his way to reading.
Not too far behind him is his sister. She is learning new words every day and I'm constantly surprised because Karim had maybe a handful of words when he was her age. She's even held on to a couple Arabic/Egyptian words like hati (give me) and bah (all gone). Her favorite word is Baba and she says bonk and ouch a lot, especially when playing with her brother. A few days ago she made her first combination of words with two of her favorite things, she said, "baba shoes" while showing me Baba's shoes. Another favorite word/thing  is car. I'm sure this has a lot to do with Karim since his life pretty much revolves around cars/transportation.