I think the park owner did the best he could to satisfy everyone. We don't know if the RV group was already on site, making canceling whoever got the site difficult.
We've only had a reservation canceled once where we didn't find out until we arrived. It was a state park, and they did offer us a spot in their "volunteer village" next to the maintenance shop since there were no other sites available. It was disappointing, but in our case understandable since the fire department and police were still on scene at "our" site where a domestic dispute resulted in the trailer being set on fire. We accepted the temporary site, and three days later were allowed to move to our reserved site after it had been cleaned up. We were pleasantly surprised to notice a few days later that our entire two week stay had been refunded to our credit card.