I would say that if the other coach wants to use the timeout to talk with his players that's his right. If they both agree to just let the sub in then go ahead and play, but my feeling is if the coach wants to use the timeout to coach then allow him the time allowed by the timeout(60 or 30).

If there are local rules that say otherwise then that is a different issue but normally I would say give him the time if they want to use it.