Youth sports are a desirable, healthy activity. Not everyone chooses to play, and that's fine. But in general, the more opportunities that we can make available, the better. In theory, the goal should be a team for every player, and an appropriate competitive level for every team. In the real world, we run into constraints on fields and coaches, and we work around those as best we can.
The club model is inherently superior to the school-based model because clubs can be as broad as needed at the bottom; well-developed clubs start with no-cut recreational teams at the entry level and more competitive teams as one moves up the ladder. Club play at the top levels is extremely competitive and is often dramatically superior to the game being played in the high schools. School-based models, on the other hand, are inherently narrow; a high school will pick a JV and a varsity team, and everyone else is out of the sport. (Including superior players who got cut because the coaches misjudged them in a short tryout; players who are late bloomers and who would have been great players at age 16, but missed the cut at 13; players who turned up sick or injured at tryouts; and players who got cut due to coaching favoritism, nepotism being one of the infamous banes of high school athletics. In a club system, all of these players get to stay in the sport with a chance to improve, get healthy, prove themselves and rise over time.)
In any youth sports context, my goal would be to afford an opportunity to play for any kid who wants to play. If the kid isn't very good, that's fine; he can play at a lower level. But I would do whatever I could to broaden the base. I don't have a problem with allowing a girl to try out for the boys team if there is no girls team in her sport. As a practical matter, this will be pretty rare. If a small school doesn't have a girls' basketball team, girls who really want to play basketball will go somewhere else (at least, in a major metro area where there are alternatives). But mostly, if there is no girls' team, the girls will never get basketball on their agenda to begin with. Youth sports is highly social, especially at the younger ages, and the girls will play something else with their friends.
This case is unusual because the school had had a girls' team, and dropped it, leaving this 12 year old stranded. She got caught in a transition. My reaction would be to find a way to let her stay in the sport, provided she is good enough to make the boys team. The story doesn't give enough detail to answer all the questions. Is she a good player? Is high school basketball a goal? Is there a strong local club team she can join? Why did her school drop girls' basketball to begin with? (Lack of players would be my guess.) I agree that a lawsuit isn't the right way for her parents to respond to the situation, but I hate to see an established player pushed out a sport because the adults can't get a team organized.
Club sports are fine, but they don’t have the cachet of the school teams.Not every parent would agree with you that it doesn’t matter if their son makes a school team or not. My son didn’t have that problem, but one of his classmates was borderline - in athletics and I guess elsewhere as well. He made the volleyball team, and his mother was thrilled with its effect on him. He did not make the basketball team, the same mother was up in arms.
It’s a tough thing.