I agree with most of what you're saying. And I don't think there should be complete competitive parity, but I do think that the whole premise of "he's being punished for being too good" as suggested by his mother, the article, and some of those commenting on here is off base. The whole situation has been handled poorly and the kid is suffering for it - but there is a responsibility for that suffering that falls upon his parents and coaches because he was obviously already good enough to not be in that league before he ever signed up this season (hence the two teams, including defending champs, competing for his services). It's not just the league's fault - that's all I'm saying.
Moreover, as others have stated, he is not "exceptional". He's actually maybe a little above average for his age. They've made him "exceptional" by putting him in a league with kids who are below average, young, or inexperienced.