The kid has been "laid off" from his roster spot.

I don't agree with this process but all three of my kids played travel baseball/softball at that age and this was standard practice. There are two productive ways to handle it:

1) Keep a stiff upper lip and watch the affected kid be cast off mentally before the season is over. It sucks since you paid for an entire season but once teams decide to make a switch for the fall (which starts in 60 days) they want to move as quickly as possible. The parents need to explain to the kid that this is a life lesson in perseverance.

2) Remove your kid from the team. Ask the coach if it's ok and say you understand and want to keep a good relationship. The coach will be relieved you want to leave and say "Sure. He's a heck of a ballplayer and I wish him good luck". I'm not sure why the kid isn't guesting on the B team right now.
As far as only batting 9 players, that's very common. I was an assistant for four years for a guy who was very successful and won many tournaments. But he ALWAYS batted the full roster. I'd say he lost at least 3 championships where one of the bottom three batters failed in a key situation. In one situation the last batter was walked and immediately got picked off. Still, he never wavered. Other coaches would note (win or lose) "And you guys batted 11 players!")

This should be asked at the parents meeting at the beginning of the season. If a coach says they "may" only bat 9 on Sunday, that means they WILL and you should take it that way.