Last week, I went to watch one of my DD's TB teammates play with her HS team. She is one of two freshmen on the team (both Ps). The other freshman got the start and pitched a complete game. My DD's teammate didn't get a single pitch, didn't get an AB, and didn't even get to run for anyone. Throughout all 7 innings, she was the loudest and most energetic player in the dugout, celebrating each one of her teammates' successes on the field.
This is a great example of how to make the best out of their situation.
1. Yes, your girls should probably be playing
2. The Head Coach doesn't seem (per your version) to have handled this in the best way
3. Neither of the above two matter. Make the best out of the situation. They can take charge in practices, become leaders, prove it on the practice field that they should be playing. If they're not, then cheer like hell and be ready to perform when called upon.
4. They're still playing outside of school play where the level of play is appropriate for them, and this will not stunt their growth as players. But it'll grow them as individuals and teammates.