If the rule book doesn't prohibit peeps, or equivalently say something like "only open sights in offhand matches", the man sounds like he was shooting legal, fair & square, etc to me. Instead of bashing him for unsportsmanlike conduct, you could equally praise him for thinking outside the box, & being innovative so as to give his fellow shooters his best competitive effort to overcome.
And, from the peep sight user's point of view, suppose (hypothetically) he had made a special effort to attend the match, driven a couple of hundred miles looking forward to friendly competition and making new buddies, and then gotten pinged on because he wasn't following an unwritten rule. He could have left thinking the hosting club would do ANYTHING to make sure one of their own good ol' boy members won. I recall a few years ago making inquiries about the rules for an upcoming match (a match, not a rendezvous), and asked if inline pistols were allowed in the pistol match. Instead of a yes/no answer, I was only told they 'preferred you to shoot tradtional pistol.' I would not have been happy competing with a Kentucky flinter against inline zip guns, Rugers and Patriots, nor would I have been happy taking my Zip gun and being the only guy on the line with one. The rules define what a level playing field is for an event.
If the incident really bothers the club and the members feel it violated the spirit of the game, a rule change is in order before next year. At a Range Officer Training class, I think I remember the instructor saying one approach is for a club to invoke the NMLRA rule book, with any exceptions the local club wants to make posted. Start the match off by saying "Guys, club rules are posted over on that bulletin board. Read and Heed. Good shooting."
It's been thought provoking thread- thanks for starting it. SCL