Yes, Rabbi Forst did it correctly.
As I have been saying, there is no Kashrus issue with Mehadrin Kosher. You seem to also feel that way. You just don't like the way it was done.
(You might be correct about that. There was a lot of behind the scenes before they opened to try to up the standard in a more peaceful way.)
That is why this lawsuit, and the Dinei Torah which led to it is valid. You cannot slander a competitor with baseless claims because you don't like the competition. A Rabbi cannot use his position and make claims the Kashrus is not acceptable just because of the way it was done. That seems to be the basis of the lawsuit.
In addition, the Vaad shut down, or at least is trying to shut down the Rabbi Forst mehudar list too. Now it is almost impossible to know which establishments are truly mehudar. Last summer when the Vaad attacked Mehadrin Kosher, they promised transparency and mehudar lists. That never happened.
Our city is too diverse. The same way the Vaad accommodates those who do not want a stricter standard, they should accomadate those who do want that standard. Now people who want to keep more strict guidelines have nowhere to turn to find out where they can eat. The establishments also do not feel the need to upgrade to a mehudar status because they know nobody will know the difference.
(A small example: As many know, the KAJ dropped Empire based in what they felt were Kashrus standards. They are now under a different supervision. The Vaad, trying to keep their promise to be transparent, out out a letter stating they looked into it, and still accept that poultry. They have a right to do that. But they refused to explain why they disagreed with KAJ. Anybody who wants to be mehader and who follows the KAJ have no way to know where they can eat, and whee they can buy their chicken. (Although GG does provide specific shechita by request. There is no specific supervision guaranteeing those requests are being fulfilled accurately)
Another example is chometz after Pesach. Most Vaadim do not allow purchasing chometz from C&S distributor l'chatchila. That is OU, Star-k, Chof-K, AKO and most Vaadim standard. This was also the opinion of Rabbi Belsky ztl. Our Vaad does allow our local stores to purchase chometz from C&S im.mediately after Pesach. Those who want to be mehader have no place to shop after Pesach locally.)
Either they should create a Vaad Mehudar division, like places such as Montreal have, or they are going to have understand a new Hashgacha is needed.
There is a lot to write about the "standard" issue. And I am not confident Mehadrin is taking care of any of the issues. I wish they would. But I do understand the basis of the lawsuit.