All cats have similarities, but also wonderfully! they are their own little cat "people" too, take time to observe and enjoy.
Probably I'd say this is as little kittens do, the intention of kneading milk - but just mixed up an adult body behavior.
He loves being stroked, held, and petted, and just doesn't quite know what to do with himself - he's just so very happy, feels so trusting and content just like a little kitten, but he is also an adult cat, so out come the claws for ultra kneading action! (It's his version of super sizing hugs!)
I'd say congratulations, for giving him the chance to have a family he can trust so fully, he sounds so happy! xox
Please don't mind the prickly claws (he's an adult feeling all the love and open honesty of a little kitten, and is obviously so happy and grateful for a second chance! Not many experience this again in life, and you've made that possible! (Be happy he is happy, You have done well!)
He certainly doesn't mean his prickly paws in any sort of aggressive form.
So please endure! Enjoy knowing you have made one little cat very happy and relaxed enough to believe you are the ultimate mum :)
as well as protected enough that he can act like a little kitten. You really have achieved something special! Especially since he is not standing or in any defensive position, just relaxed completely - standing would still mean "Ready to run if I must", so not completely off guard.
(Some wild cats never lose this no matter the home, so be happy he is able, after all his adventures, to trust! It says a lot about his character and yours).
His feeling of security and love is in fact so strong he feels he can relax and be fully at ease again, not on guard, or afraid, (it's his highest praise) and a few holes are worth it :P
Maybe cats are good teachers, "Love is worth a few holes" :P
I'd say lesson one accomplished. :P (Nanny McPhee eat your heart out)
As a side note (I did have a cat that did this and also stretched her arms out as you describe, I used to hold her paws when she did it and very gently press her paw, to retract the claws while talking gently, as you would a small baby, never hard, or to cause pain - She actually liked her paws being held and would sleep this way too, and wouldn't sleep until you were holding them ;). She eventually learnt that this was not correct behavior and understood how strong she was. But do it in their time not yours (just as you would with children) - Cats are smart they train us eventually :P
keshlam did remind me for indoor cats they will need to have claws trimmed (since I am used to indoor/outdoor cats that had a very big area to explore, we didn't really ever need to worry if they are getting enough exercise outdoor).
Absolutely never de-claw. Cats really have no chance without claws. It's their really last resort (called scaredy cat for a good reason, they hate fighting! and won't fight unless they really must, usually they run and are very shy creatures. If confronted please at least give them that).
Keep them in at night, well fed and loved and all should be good :)
(I have also worked with partially wild cats - that were used for breeding then dumped by owners - so have I a little experience in taming and re-socialising, trust that you have a precious opportunity).
Your cat is signalling that he accepts you as mum! - you will both learn and grow together - and you will have something special to show for it (yes maybe a few holes - but also a complete heart and happiness for both :) )