Everyone needs to understand that race directors can essentially do whatever they want. As long as its not illegal.
Allowing whomever into a filled up event at the last minute, comping entry fees, favoring fast or other runners, etc. is very common in most races.
It is their race and if you do not like what they do, you can try to contact the director to complain/suggest another way to do things. Good luck with that.
Or you can choose not to support that race. You will feel better,
Or you can try to expose the race director and their questionable practices to other runners, hoping that enough will agree with you to contact the event director and/or not support the race. Most runners will not care about your concern. If its a popular race that fills up quickly the few who boycott this race will be replaced by new entrants that don't care.
And/or you can direct your own race and do things the way you believe they should be done.