How many non-tournament games are there? I thought the coach said there would be some and all players would play in those games.
Can your son play on a rec team and a travel team? When my son was younger several kids (mainly the borderline travel level players) "played" rec ball and were on the travel team also.
Bottom line though is at that age your son needs to be having fun and if he is not having fun on the team he is currently on he needs to do something different. I hate kids that quit but if it is a really bad situation he should go talk to the coach either before or after practice and say "I know you said that you were going to play the better players in tournaments but I thought I would get some playing time. I don't want to go back on my commitment to the team but if you don't think my playing time is going to increase would you release me from my commitment." For a kid learning how to meet a problem head on is a lot more valuable than learning how to hit a curve ball.