I do believe that they have to honor the scholarship, they do not have to provide a place for him on the roster. I also beleive that they cannot use the scholarship money that they awarded your son. I don't advise going somewhere he isn;t wanted, but don't go out without a fight, contact the AD, what have you got to lose. Contact JUCO coaches asap. If your son is good there will be plenty of other D1 opportunities.
I agree this is totally wrong, this is a perfect example of poor planning in recruiting.
While I do beleive you, I also think that there are always two sides to every story. I don't advise posting the school here, that is up to you, but you could pm privately those that might be interested.