The article says this is a developmental league for kids age 8 to 10 - which to me sounds like what we call around here "minor league", where you play until you are ready to participate in the "regular" little league level. If it's a developmental league and he's developed beyond the level of the league, I see no problem with saying he belongs in the next level up - that's what is supposed to happen. Sounds a little to me like they've kept him down in the lower league so he can dominate and win a championship - which if it's a developmental league they shouldn't have in the first place (so that fosters the problem, as do the pissing matches between parents & coaches on the two teams that wanted him). The two key things I see here are:
1. He probably is too good for the league which by definition is for kids who are "not so good yet". So, there is nothing wrong with having him bump up to the next level because that next level is designed for him accommodating both his age and ability (9 years old is little league age).
2. If the league he is in is truly a developmental league, then they shouldn't have playoffs and championships and parents bitching and moaning over who gets what kid and pulling kids off the field because they don't get their way.