As the story developed on the Dunsire forum, there may be internal conflicts within the band that contributed to the mess. The DM at the center of attention is well-known to some pipers I play with, who are former or current PM's of well-respected East Coast Police and/or Firefighter pipe bands, as a stand-up guy, Yes, the order was given that only military bands could acknowledge the POTUS, and the Cleveland band, (some argument here), either is or is not a para-military organization. There apparently were "other bands who complained" but who they were is a mystery.
As I watched the parade live, and later DVR'd the C-Span re-broadcast I noticed quite a few acknowledgements, nods, waves or whatever by non-military marchers obviously directed at the POTUS, who, at least during the first hour of the parade who waving and acknowledging them. He was also saluting at times, and I think he got corrected at one point by a Joint Chief because he, the POTUS, started putting his hand over his heart, and then went back to saluting a short time later.
I guess my point is that as a military parade this wasn't Red Square, there was a lawnmower contingent and various other non-military components, an internal conflict was probably the key ingredient in this mess, and it should have been dealt with in a different manner than it was, quietly behind the scene, because after all it is a trivial incident and the DM has quit, the band manager also quit, the PM is generally getting pilloried, and the band has to deal with this incident hanging over their heads. Hopefully the band will recover from this and it will be forgotten, but knowing how service bands operate there may very well be either some repercussions or more likely some friendly needling from other bands in the future.