OP, This situation is very unfortunate. Many of us warned about this when the NCAA made a ridiculous decision to appease a student-athlete committee that was what I call WM2, well meaning but wooly-minded.
Usually the advice to go JuCo is pretty solid for those really interested in playing baseball, except that all of college baseball is going to be overflowing with talent next year. Given the unusual college baseball times we are living in, I would advise one of two routes.
First, if scholarship money is necessary, stay and take his chances on the current team. Recognize that the coach doesn't want your son's money because he doubts him, he wants it for the proven, older, talented grad students, JuCo transfers, and those in the portal that the NCAA gave an additional year of eligibility. The HC wants your son's scholarship money to lure that talent. The NCAA just opened up the flood gates with talent and the coach is trying to capitalize on it.
Second, if scholarship money isn't as important and this was a school your son was only attending for baseball, and would prefer somewhere else (as you alluded to in one of your posts), look at this as a glass half full situation. Contact the coaching staff at schools he really wants to attend for academics, go visit, start the recruitment all-over again. With rosters being unlimited this year, it gives him a chance to prove himself on the field at a place that he really wants to be if baseball doesn't work out.