While it all seems unethical, seamy and even slimy, that's what contracts are put in place. Conflicts of interests in the legal sense are primarily related to representation in times of disputes or disciplinary proceedings (in other words you can't play for both teams in a competition legally). It does not apply in this case.
High school coaches are typically not called upon to provide expert baseball analysis when it comes to college recruiting. A majority of high schools have employees who are teachers first and coaches as their secondary jobs. My son does not even list his high school coach as a contact unless a college coach requests his info (funny thing is when they do, if they have recruited kids from his school before, they just toss the number and say "No need to talk to him anyway. He either never calls back or his information does match up with what they have seen."
Maybe this guy in question here is legit.and has earned, through time and effort, respect in the industry. With that, he has generated several contacts along the way. In business, we call those "soft assets". Assets, soft or hard, are meant to generate revenue. From my view, this coach is using his soft assets, his contacts or his ability to help with the recruiting process (AS LONG AS HE IS LEGIT - because their all phonies out there. I know a few).
I guess my suggestion would be, rather than speculate, investigate. Ask him for some time to discuss some things not related to playing time, wins/losses, etc. Get his perspective. Maybe he would be willing to provide some transparency. If he comes across more cryptic or shady, you may have a bigger problem on your hands.