Okay, lets address it from this angle. From the description of the OP, this wasn't the first time the problem was identified. And in the first instance, it was not addressed with any type of discipline and/or sanctions.
Why?
It has now been addressed, but not to the satisfaction of some here looking at the situation. So why did the instructor choose this type of sanction in favor of something else?
As far as the boy being 'smacked around'...we still realize we're talking about an 8yr old kid right? Is returned violence what is being suggested here? Well...yes, that is exactly what several of you are advocating in this situation. I don't really see this as addressing the root of the issue.
But then, if retaliation, revenge and violence-in-return for this type of situation is the solution...does that apply to the next guy that cuts you off in traffic or takes your parking spot? Where is the fine line? When is teaching a kid retaliation, revenge and violence-in-return acceptable and when is it not acceptable?
I think you are over reacting to be honest and taking this out of context.
The root of the issue is that he should be stopped from sparring full stop not just stopping from sparring girls, that is reinforcing what he believes...that girls are weak, he needs to be shown they aren't and if that means a smack while they are sparring so be it. It's not revenge, it's not retaliation, it's defending yourself while sparring. It's not smacking someone because they cut you up or anything like that, it's smart sparring.
Children aren't just sweet little things, they can be killers, here we are still haunted by two ten year old boys who abducted a toddler then tortured him before killing him, it sits in our collective conciousness and makes us afraid still.
I'm not suggesting of course that there's anything like this with this boy but he needs more than just being banned from sparring with girls.