As others have responded the officials have no authority to decide which players may play, nor may they insist that a coach/team substitute for a player. If a team member has not been DQ'd then he may participate. Of course, a request can be made to a coach, but that's all.
In your situation it was a freshmen game. While I would not have handled it as your partner did, I wouldn't make a big deal out of it either. Now I wouldn't let my partner do it this way in a varsity contest, but perhaps an official could observe that the player's uniforms were not being worn properly.
