You need to obtain a copy of the Bylaws and rules of your league where your son plays. Most leagues have a voting system of some sort whether it be the coaches or the players or a combination of. In many leagues the all star coach is usually given two to four spots to complete the team. Again you need to read your league rules.

Which league does your son play in?  Little League?  Pony?  Cal Ripken /Babe Ruth?  If he is in any of these leagues they are required to have bylaws, rules and procedures.  It looks like someone is lying to you.  You will need to go over the head of your league to get to the bottom of it.

Little League Bylaws, Local Rules & Ground Rules or http://www.littleleague.org/leagueofficers/Bylaws__Local_Rules___Ground_Rules.htm

For Little League: 

Each local Little League Board of directors should adopt its own bylaws, local rules or ground rules (the terms are interchangeable.) This document or documents expire annually at the end of the fiscal year and must be renewed annually. They normally include the local board's procedures for selection of Tournament Teams (All Stars), specific ground rules for various divisions (such as whether or not the 10-run rule will be used), etc.

Because each local Little League board of directors should have authority to change these types of procedures, they require only board consent, without the general membership's approval. No part of the bylaws, local rules or ground rules can conflict with or supercede any Little League rule, regulation or policy.

I am also questioning how they pick for the travel teams.  My son "tried out" last year for the 8 year olds, but they never took anyone's name down.  The whole process seems fixed, it should be based just on tryouts.  Every kids should get a chance to tryout, not just get on a team because you happen to be friends with the coach.

Perhaps you should look at other options when it comes to leagues. Sometimes the best choice is to pull your kid from the league or find him a club team for the summer. In my area I can have have my son in Little League or at one of 5 different Pony Leagues. There is also plenty of year round club ball. Personally I don't care about all stars because I have an older son that went through all the political junk. He is now a starter on the varsity team and most of the kids that had the benefit of daddy ball now sit on the bench.

Little League has a "recommended" method for choosing the Tournament Team but it is only a recommendation.  LL leaves it up to the Local Leaague Board of Directors to decide how to select the players.  LL says that leagues should include how they select their Tournament Teams in their Local Rules.  Seems like your league did not do that so I "assume" your BOD just said "let the manager decide" who he/she wants on the team.

As for the District Administrator (DA) getting involved, the DA has "no authority" to tell the league how to select the players, as I said above this is totally a Local League decision.

The horse has left the barn for this year so I would suggest that for next year you "make sure" that the Local Rules include the method for selecting you Tournament Team players (and I would NOT suggest it be left totally up to the manager).