As worded, it could work. As shown, execution is lacking.
From what I can tell there are two interrelated junctures for decision making.
1. Policy can expand on federal protections but they can't reduce them. Does administrator factor this in? Yes, move on to next step. No, go back to start.
2. Does the approval process of the administrator take in to consideration the necessary allergens, actual risk-benefit calculations and access issues to ensure FAPE? Yes, (not likely) all kids needs coordinated. No, (likely) go back to drawing board.
In my eyes the problem is the principal going maverick like he or she is a one-person Halloween special, peddling sweets and encouraging ingestion in direct opposition of 504 compliance, an unreasonable expectation placed upon the child's age-appropriate ability to self advocate, and common sense.
My personal opinion is the administrator is being petty. Dial the candy back, you know? It's not that hard. But maybe that's what s/he is doing. *shrug*
I can't think of a single credible medical resources that encourages adults, ANY adults, to give children more candy.