This is nothing new. There's a large contingent in this generation of parents devoted to ensuring that their kids never have to suffer loss or disappointment of any kind. And yes, it starts - or is most obviously manifested - in recreational sports. Many leagues no longer keep score. When I was coaching, years ago, the woman who was president of the local rec soccer league instituted "Silent Sunday" - parents in the stands were not allowed to cheer or clap and coaches on the sidelines were prohibited from issuing directions or instructions to their players on the field.
Most of us here understand that this is a bad trend. Life isn't about zero competition and not everyone in the adult world gets a trophy. Insulating your kids from occasionally harsh realities is to deny them the ability to develop necessary coping skills. These children of "helicopter parents" will ultimately be ill-equipped to deal with the things life hands them.
Good post. We probably coached around the same time - I coached rec soccer from about 2000-2008 (when my son was in the system - good player, but not quite good enough for travel soccer). Luckily we had no yenta rules like you guys did - no cheering is just freaking stupid, as is no coaching - they are there to get better, even in rec league.
I did use to have a meeting with all the parents before the season where I strongly advised them to just cheer and to not yell at their kids or others' kids (or the refs or the coaches, as we're all volunteers), as that can be pretty tough on a kid. I told them that if a kid screwed up, we'd talk to them about it as a teaching moment and if a kid was out of line, we'd mete out any discipline.
Since it was rec, though, it was pretty low key: we did keep score, but both teams would share in snacks/beverages after the game. My main role, during games, was to ensure that all the kids played relatively equal amounts of time and got to play a few positions - sure the kids wanted to win, but we wanted them to enjoy the games and try to get better.