That's a craptastic situation all around.
While I agree with you that it sucks, I think the TO made the only logical decision. If you ignore it because it makes little difference you make two new friends, a fair number of people could care less, a fair number of people will be quietly disgruntled, and one or two people will be vocal pricks. Whereas if you do as this TO did, you only wind up with two people who are put out and a general feeling of indifference from everyone else.
I also think it would undermine the quality of the store's tournaments, and at least one person would try to slide something duplicitous past you the next time.
It sucks, but dq'ing them makes the most sense.
Later,
Monkey