We had what was a mediocre team for our area up through 14yo as we tried to keep it to fairly local players. One time after one of the pay for play teams in the area had broken up I got a call from one of the parents of that team's top player. I told the dad his son was welcome to play with us but that he probably wouldn't be getting the level of competition he'd get if he went elsewhere. Our kids got their playing time and the kid found a stronger team, has a good scholarship lined up and will probably be drafted in the first 10 rounds somewhere. Win, win as far as I'm concerned, although it would have been nice to have him hitting cleanup.
We did bring in players for one tournament stints at times but that was to keep from destroying arms or because someone was missing at a position.
We even had one kid go off to play for what they thought was a better program. The mom tried to cover it up so they could use us as a backup, then the dad told me the straight story. I just told the dad it was fine but our full time players would get first priority.
I don't think there's one right or wrong way to do it. The key is that the parents and players know exactly how the team/program approaches these things up front.
