I welcome people to fish with me at any time, whether I'm catching fish or not. I'm not tight lipped about my luck or lack thereof, and I like many other guys on the staff LOVE the fellowship that goes along with icefishing!
That said....
You are absolutely right! There is a level of etiquitte that must be respected and practiced by all anglers in all situations. It sounds to me that the adult in question here may not have used his best judgement with the boys, and ultimately their actions are dictated by his guidance. The kids probably saw the immediate gratification of having a ready-made hole and wanted to fish right now. That is to be expected, but I would also expect the adult in charge to be the voice of reason and keep the situation under control.
Had they come out and spoken to you right off the bat, and set up there own site even 10-15 yards away it would be a non-issue I'm sure; especially with kids involved and one guy keeping an eye on them.
I'm glad that you brought this up because it's good food for thought, and as we have a lot of new ice anglers on the site it will be helpful for all of us to think about our manners on the ice.
It's great that this guy took the time to bring these kids out to fish though!
Sorry about your shelter...
RatherBe