I agree with cball in the last post. Finish the season. I would follow that up with a professional letter to the proper school authority that outlines the problems, and let them know that your son will not be back next year if this coach continues. If the coach is as bad as you say, I would think they will get 10 such letters and do the right thing.
If your son started as a freshman, you are at a smaller school and your son will have already gotten the recognition needed to play in college.
My real problem with this coaches actions is not so much your kid, but the kids that aren't wanting to play at the next level. The posters here talk about how this will separate the tough ones that can go on to college and pro ball, because they have kids in that category. But if you focus on the level they are playing at now and realize that most of those kids are finishing their baseball in high school, this coach is doing a huge disservice to the majority of this team.