exactly!!! IMHO, this is about abuse of power and not knowing when to pick your battles! I know some people will make this about the principal maintaining respect, but when you are this petty (not allowing kids to show support for the other team) and when you choose to push back so hard on something so minor (in contrast to the issues educators are faced with) - then you just come off as more juvenile than the kids you teach and end up losing their respect! Yeah, the principal has the power, but it up to him to use it wisely...this is abuse of that power and a lack of common sense as far as picking his battles.
Again, I am so glad I am from an area where this kind of nonsense isn't the norm!