Interesting story since it's my old school. From what I've heard the headmaster can't be arsed dealing with these difficult parents anymore and is retiring.
My wife was a teacher and she believes the school made the right call since it sounds like the family were not coping with their child's needs and needed extra support.
Rumour from the school is that the child had socially transitioned but the parents were not aware of this until their other child informed them. Mother is currently campaigning on twitter and name dropping all of the teachers involved in an unpleasant manner.
One interesting angle is that this is a private school so the parents probably feel that they ought to be able to dictate exactly how the school ought to handle the situation. At the end of the day they are still a school though with a duty of care to the students. They need to follow government regulations assiduously and at the time the guidelines were clear.