I completely agree with you about coaches blocking kids from certain schools. I do worry about kids being able to transfer to another school at his own whim. I think this could quickly get out of hand and I bet within five years they are tweaking the rule in some fashion.
I do have one nitpick ... except for certain situations, scholarships are one year deals. A coach doesn't have to take away a scholarship ... he just doesn't renew it. I guess this does work against my point in that if schools are only committed to kids for one year then perhaps the student should only be committed to the school for one year.
Hmmm ... perhaps a more equitable answer would be that a scholarship acts like a contract. If a school commits to a player for four years (which I believe only D1 schools can do) then the player can't transfer without permission. If the school only offers a traditional scholarship for one year then the kid can transfer.