There is no pat answer on over-signing or taking a kids scholarship. Schollie are one year deals. I know for a fact that coaches often, at least when confronted by the recruit, verbally address and in some instances make promises regarding whether they reserve the right to pull the schollie.
For example, I know a particular kid that addressed the issue with two different coaches recruiting him. One coach said he would agree ((handshake) to never pulling his scholarship and the other coach made it clear that an evaluation would be conducted after each season and he wouldn't make any such promise.
In other words, I think whether revoking or not renewing scholarships is proper depends on what has been said and promised. If it hasn't been addressed, then maybe it is a grey area subject to differing opinions regarding right or wrong.
Usually, it isn't a problem, because if a kid can't play at a school, the coach and kid will reach an agreement on that and they agree it is in everyone's best interest for the kid to move on (usually to lesser competition). This very thing happened to my nephew. New coach told him he wasn't going to play and that he would be wasting his career away at the school and they agreed the school would release him and he would move on. It doesn't have to advaserial.