You're right that inducing vomiting often is not healthy; I wouldn't worry much about nutrition, but the lining of the esophagus and throat weren't meant to be often subjected to the acidic contents of the stomach; also, there are occasionally consequences elsewhere.
However, some things to consider:
This will pass; it's a new superpower he's discovered and he's exercising it with glee. It makes him feel a sense of control over his body, and for this reason I would encourage you to try not to make a big deal out of stopping him; doing so may make him want to do it even more.
Kids usually don't make themselves vomit forcefully (think bulemics); a mouthful of vomit is usually entertaining enough. More than that and it becomes unpleasant. If your son trucks through a forceful vomiting experience happily, I'd be very impressed.
If he is just doing this at mealtimes, the vomit he passes while eating will not be very acidic (not enough time for a real pH change) so I wouldn't worry too much about significant damage from that. Try a variety of distractions (toys, games, other) to see if you can get him interested in something better for him.
If he is doing this between meals, that's more worrisome. It's impossible to keep a toddler distracted all day, and if he's amusing himself this way - or worse yet, doing this for attention - it will be hard for you to get him to stop. Focusing on making him clean it up thoroughly every time (even though that means a lot more work for you) might be enough to detract from it's entertainment value. If you think this might be done to attract attention, focus only on the clean-up. If he's bored, try to make his environment more engaging.
You can try applying something bitter on his fingers so the taste repels him. This might help him to appreciate washing his hands before eating as well. (Make sure the substance you use won't affect the eyes or nose.)
If this behavior continues for more than a few weeks, I would consult his pediatrician. At this point it might be better to switch to a consequence/reward system.
I don't envy you, but this behavior is not uncommon and is usually short lived.
I wish I could thing of something to feed him that is positively vile coming back up, but it would probably be vile going down as well. Sorry.