Is this such a Bad play???

Giving you my perspective on your comments in order:
(1) No, of course, the play is not dirty. Neither is the hidden ball trick, the shortstop cutoff play (on a double steal), the second base decoy play, the possum play (where the catcher castches the ball on the short hop but pretends it's lost to get the runner to advance), the vacant first base play (on single to RF, 1B leaves his position and catcher comes down the line behind base coach to steal an out), and walking to first, then taking 2B on the throw back to the pitcher. Two marginal plays are the pickoff at third (I was afraid one catcher would break the batter's nose) and the 2B steal intercept (the 2B tells a young runner who's stealing that "you've got to go back now").
(2) The reasons for opposition to these tactics is threefold:

(a) Experienced teams will have seen the move and will know how to counter it. The trick you describe is used by two teams in our league; it gets booed because every player knows they're going to do it, it wastes twenty to thirty seconds while the ball is hidden and tossed around, and it never works. This is the objection you'll hear from veteran coaches (like Jon).

(b) You describe yourself as a veteran coach; part of being a rookie is paying dues. This applies to coaching as well as playing, but the coaches know how to act like adults (all right, grown-ups) and can communicate their dismay for all to hear. Still, you're doing a valuable service. In the best LL in Tampa, the new Minor A coaches get smoked by the veterans. Some quit, some complain, and some learn their lessons. The next year, the veteran coaches move up to the majors; the former rookies, having learned their lessons, now educate the new crop, and the cycle of whining (and winning) continues. Next year the Minor A coaches in your league will probably all know and use your trick, to the disgust of the new faces.

(c) One tough aspect of teams sports is that each grou learns to look out for their own interests. When I act as a league official, I hope that all my league's teams have a .500 record and that everybody gets to play as much as they want. When I'm coaching a team, I want to bat 1.000 and to shut out the opposition. It seems harsh to opposing parents when the dominant team uses tricks; after all, they don't need tricks when they have the superior talent. But winning, IMHO, requires learning about the killer instinct and that kind of ruthlessness that we hate to see in others but love to see from people on "our side."

Finally, part of what's involved here concerns your own approach to and outlook on the game. Many parents used to object to my minor teams because we'd drill trick plays -- they wanted "fundamentals". My players, however, were interested in the tricks, and what did I care if a kid learned to throw and catch defendning a double steal or in the usual drill of lobbing a ball to first base? If you are teaching the basic skills, then the players are learning baseball fundamentals.

In LL, I was a catcher but was not blessed with either a great arm or great speed. I hated runners who seemed to torture me and tease me. As a coach, my teams are extremely aggressive on the bases, both offensively and defensively. After a couple of innings (and a couple of pickoffs), opposing base runners confine themselves to a one-step lead. And really, that's what you want against the running game: to make the opposition less bold or to make sure they know they can pay a price for reckless baserunning. In short, the answer to trick plays is talent and experience. If you've got those on your side, then teach the other coaches by example. But just be ready to defend against those tactics when the advantage is on the other side.