How I'd probably handle it:
Coach: (Offers incorrect rule interpretation.)
Me: (Offers correct rule interpretation.)
Coach: "No, that isn't right...blah, blah, blah..."
Me: "Coach, do you wish to file a protest?".
If he does, we handle it.
If not...
Me: "Coach, we're finished discussing this. Please return to your dugout."
His reaction to my request will determine if he remains in the game as a participant or not.
How I'd like to handle it...
"Coach, you seem pretty sure of yourself and seem to think you have a better understanding of these rules than I do. Let's make this interesting. Fifty bucks says I'm right on each of the rules you're arguing. Now, that's fifty bucks for each one of the rules you think I have wrong. After the game, we'll grab your rule book- you do have a rule book, don't you? If not we'll grab mine. Meet me over at the wiener wagon and we'll go over each rule point-by-point.
Oh yeah...I accept cash, check or credit card!"
