Agree with you SkatingDad.
It's no better in AA, because play levels are not part of the criteria qualifying you to referee either.
What is very apparent is that in other regions, there seems to be a better understanding of the basic rules of the sport. This can be a minor shock to Cali kids who are being trained to avoid penalties. There is a reason for this, but I'll address that later.
For example, there is an entire book on "Body contact". I know that many parents are not aware of this, and I wouldn't expect them to be, but there is a lot of contact allowable at this age group, and yet I routinely see penalties called on what should have been legal contact because the ref heard a "loud sound". Rubouts, and contact that entails closing out an advancing player via a rubout along the boards are good examples of what is suppossed to be legal body contact, and yet turns into a penalty. For 50/50 pucks, kids sometimes run into each other. That is not a situation where a kid should be penalized because they knocked down another kid who was going for the same puck, again assuming that the kid was focused on the puck and not on trying to check the other player.
There's also the ever present "big kid collided with smaller kid while going for 50-50 puck" which 90% of the time ends up with "Big kid" in box.
I watch refs routinely make calls on plays they can't see because the ref is looking at the backs of the players and "guessing" that there was a trip or something else that occurred.
At the end of the day, refs are highly fallible. It is not easy to referee a game, and let's face the facts that experienced refs want nothing to do with youth hockey. It is not worth it to them to deal with the low pay, travel and early morning games, not to mention the belligerent parents yelling at them regardless of whether they are competent or not.
Ostensibly the levels are this:
Level 1 (Mites)
Level 2 (Squirts)
Level 3 (Peewees - Midgets + High School)
Level 4 (Midget Tier 1 & 2 Nationals)
So theoretically a referee should have 3 years of experience at Peewee, although realistically they could have 2 years, and freshly passed the level 3 exam and clinic). Along the same lines, a very inexperienced ref (basically 1 season) can easily be reffing a Squirt A game, where the players themselves have been playing 3-4x as long as the ref has been certified. There is only so many refs available and willing, so in a pinch a level 1 ref can be coaching a Squirt game, and on up the ladder.
I don't see a lot of officials coming into the profession who have comfort and experience with the sport. This leads to situations where the refs are challenged just by the mechanics of skating adequately, and consequently they can't get into the right spots to see play, avoid high traffic areas, or even avoid falling on their backs. This is in basic violation of the rule of thumb, which is that refs should skate at the same level or better than the players they are reffing. I see lots of games where it's apparent the refs are not even close to the speed and level of the kids they are reffing.
But the biggest thing effecting what we all see is that the focus of referees from USA Hockey down, is "player safety". When a ref sees something they think was "dangerous" they will call a penalty because that is the focus of the job, per the training they are now receiving. They are essentially being encouraged to take a sport that is inherently chaotic and full of intrinsic physical contact, and to try and make it "safe". In many case since they never played it themselves, they really don't understand what is safe and what isn't. So we get games occasionally like the one you described where clearly a ref lost his mind. But even routinely, I find that refs are calling too many penalties that aren't penalties at all. Then you go to Minnesota, Detroit, Boston or Canada and find out how the game is played everywhere else. From what I've heard from other people, the kids do tend to acclimate, but in our local leagues, it's more often than not a train wreck. I find it helps to remind myself that it's not personal, and without refs, we wouldn't have an organized game at all to occupy us on Sunday morning.