I think it is a huge over reaction by the school. There is no way to limit a school to one person (or siblings) with CF. What would have happened if the school they wanted to transfer him to already had someone with CF? (This is assuming he does have CF and not just a carrier.)
You can keep them away from each other. If they are in different grades it would be much easier, but even if they are the same grade just don't assign them the same teacher. Schools often have different lunch/recess schedules; assign them different breaks. If the parents agree (and I think most parents would) just let the kids know who the other "CFers" are and tell the to remain apart. The parents may even choose to share bacteria culture information. And then teach your child proper hygiene; washing your hands regularly and keeping them out of your mouth/face, that would help the child more in the long run.
And yes, if a parent is still concerned give them the opportunity to transfer schools or pull the child out and home school. But the school should not be moving kids out of school if the parents are against it.