"There are big arguments about how this happened," the source said.
"It is creating big problems in the town. At least one was taken out of the community. It is not the first time something like this has happened.''
It's understood the 5-year-old was flown from Napranum to Cairns for medical treatment.
Napranum mayor Janita Motton told The Australian she hadn't been told about the alleged rape and was disappointed Queensland Police hadn't informed her.
"I am shocked, I haven't been told by police, and can't comment," Motton said.
None of the boys have been formally charged or put in custody.
The age of criminal responsibility in Queensland is 10 however children between 10 and 13 can only be found guilty if lawyers are able to prove they are mentally aware they knew what they were doing was wrong.