Teltic,
Go get another offer and find out if he was serious on matching it. If he does, that's great! To me it almost sounds like they know you and your team are underpaid, but have probably been told by HR that they cannot bump anyone up to market without a competing offer. So do what he said, and go get one! I generally feel that letting your current company match an offer is a bad thing, but in this case he proactively told you to go do it.
Another thing, it sounds like your current situation is really good. Working under 40 hours with great co-workers is hard to beat. If your boss is as good as you say, start asking for more work that would be done by whatever the next step up for you would be. Are you a level 1, and want to move to a 2 or senior spot? Are you a senior and want to move to a manager role. Start asking for work that would be done by the next level. It sounds like you have the time to take on more, even if it means you work 40 hours a week.
If most of the people there are happy with what they are doing, they might not have any desire to move up, and training/promotions might have fallen by the wayside. Start acquiring the skills necessary for that next level now. You will be more valuable and marketable, whether that is at your current employer or somewhere else. The person that is going to care most about your career growth is you. If you start taking on more difficult work, you might find it is not as boring.