I just don't see a "right or wrong" here.
Personally, I agree. I think everyone needs to evaluate their place in this sport and decide if they're happy with the situation. No matter how everyone handles move-ups, there are going to be winners and losers and personal victories. I think in any program there is a lot of room to emphasize the latter but each program is going to have their own competitive goals and progression standards based on a variety of factors.
There's just no such thing as a completely level playing field in my opinion. Ultimately, you need to fulfilled with the capacity that you're participating in for this sport and what you are getting out of it. I reserve the right to comment on practices that I feel are abusive or unnecessarily harsh, as a means to an end in this sport, but otherwise I've been on both sides of the "reputation" equation from a couple standpoints and I think a lot of people are looking for the perfect experience in gymnastics instead of focusing on the fact that there's no point to all this if you're looking for some kind of "justice." It's just not really there. I know a lot of girls who have come to end and initially freaked because it was over and they felt like...what did I just do? What did I just spend my whole life doing, for this in the end? Once there's nothing left to achieve, you either realize that you loved gymnastics in its entirety, or maybe you really did just waste your life, dunno, I think most people I know ultimately came to the former realization luckily.
The important thing for a competitive program is to provide a safe, healthy atmosphere to instill a love of the sport and lifetime fitness, and provide an outlet for the gymnast to progress and learn. There are a variety of ways to achieve that, all of them have their place and as a coach I personally think the worst thing I can do is imply or encourage things about "wearing the wrong colors" etc. I think that is really the wrong focus here until there is concrete evidence for this. That is really not making it about the kids and what they can improve to further their goals. If a parent approached me with a comment like that, I would suggest that if their gymnast was unhappy about our relative performance level, then we could meet to determine what improvements she could make to her own routine. We may also need to discuss that we train for x hours with x equipment, for x tuition, and that is a trade-off whereas this gym trains for y hours with y facilities for y amount. If they are unwilling to make that trade-off than either my program or this sport is not the right one for them. Some of the trade-offs girls are making at the other gyms include not moving as fast through the levels once they meet minimum standards. I've lived both sides of that, and personally I was MUCH happier at the competitive gym. On the other hand, some were miserable there and happier elsewhere.