Yes, he was punished for his success.
The argument is that we don’t want the others to feel bad.
Well, growing up, I played 2nd string right field in our city’s park board sponsored little league. I was not very good-I knew it then and I certainly know it now. I played as much as I did because my mom had a Ramble Station wagon and could haul all of us around. When our team did well and when one player did a fantastic job I was excited as everyone else. My self esteem was not diminished when the team did well or one player was cheered to good pitching and so forth.
I think by recognizing someone who does well does not demean others who do less well. I don’t think kids believe it either. This is coming from the educational establishment.
That's a great attitude, and the attitude that we should be teaching our kids. We should also be teaching our kids against resentment towards the winners. Resentment is the cancer that's killing our culture, and has resulted in some of the Marxist changes that is happening to our nation.
And, of course, as a winner, we should be teaching our kids to be humble and gracious. And if your kid is really are gifted at something, have him/her watch Searching for Bobby Fischer.