NCAA DH ruling

[JJ]

10 man lineup. In the bottom of the seventh, the DH is batting in the 4 spot. The pitcher enters the game and bats in the 6 spot for the catcher. The plate umpire allows this substitution (illegally, of course), and the visiting team says nothing. In the top of the eighth, the DH comes in to catch and the pitcher (who batted) remains in the game as pitcher. The visiting team says nothing, and completes their time at bat.
At the end of that half inning, the coach of the visiting team comes forward and says, "They batted illegally last inning - shouldn't there be a penalty?". The plate umpire then asks me (the base ump) for my input.
Since I was unaware of the situation up until this point, I said, "The pitcher and DH were locked into their OFFENSIVE spots when the pitcher batted for the catcher - if the pitcher bats for anyone else, he has to go." The home coach argued that since the problem wasn't caught at the time, and the DH and pitcher had played an inning on defense, everything was OK - it was too late to penalize. I replied that even though the visitors couldn't ask for batting out of order, the penalty of removal of the pitcher still applied, and we removed the pitcher from the game (to the dismay of the home coach).
Correct ruling?