My son knew them all by about the 6th week of Kindergarten, so about 5 1/2. He's now 10 and doing great in school. I'm an Early Childhood Curriculum specialist, I coach teachers and write curriculum, and I feel that this is a skill that's way overrated, and pushed way too hard early on.
Whew! Thought DS was alone.
We've had the fridge magnet LeapFrog thing, you put the letter in and it sings a song about the letter, since he was 2ish. So he's had lots of exposure, along with DH reading to him, for ages. But it's really only now, at 5.5, that he's totally getting the whole alphabet thing. He knew stuff by rote before, but...eh, that doesn't always mean you understand it.
I was reading (out loud) at 2...doesn't mean I understood all that much!
Anyway, he's doing his kindergarten level homeschool work, and after leaving it for a few months (I got sick, he got sick, I got lazy, etc) he's doing *incredibly* with upper AND lowercase letters...the amazing thing? I haven't taught him lowercase. He's just flat out getting it. Yay!
Also realize that there are two forms of reading.. phonemic reading and sight word reading. The difference is one you sound out, the other you recognize the word as a whole.
That was me at 2. And beyond. I hate HATE phonetic spelling; worse years of my life were elementary school while that was being taught to the other kids. And listening to the kids sounding it out aughhhhh. I was young for my grade and really really shy, so there was no chance having me skip a grade would have worked (though it was discussed)...I did go to the 4th grade class for English while in 3rd grade and hated feeling so obvious... But gosh, it was so boring.
No matter what we didn't want to push things with DS. Once he was 2+ and not reading on his own, we completely relaxed. My husband was *forced* to learn to read at about 8, when everyone was freaking out that he wasn't. Reading remains his least favorite activity, and he's likely a bit dyslexic as well (though there was never any diagnosis as his parents simply thought he was lazy and his teachers dropped him through the cracks). I've since learned that 8 is a totally respectable age to learn to read, especially in a boy, so there is just no pressure on DS at all. I don't want DS to dread reading!