this was my understanding of the rule but the league owner states that its ball in hand because he committed a foul...
I don't understand how it can be a foul for not marking the pocket, but not be a foul for making it in the wrong pocket? If I mark a pocket and make it in the wrong pocket it spots up and you shoot it from where it lands...However if I don't mark a pocket it spots up and its ball in hand? HUH?
He's wrong, making a ball in the wrong pocket is not a foul, not everything that is against the rules is a "foul". For example an illegal break if the number of balls don't hit a rail. Also if I was the owner of that league I would say since they have played several games in the match without marking the pocket, they were playing without marking the pocket and the call about it is invalidated.
I did read about this type of situation before, where the advice was that even if the players agree to not mark the pocket and just shoot it, the other player can still call you on doing that at any point so to protect yourself from a-holes you should mark it even if agreed not to. I call it "Hilterisms". Of course I'll sign these papers saying I won't attack these countries, yea that's the ticket. Oh oops, looks like it's better for me if I do attack them after all, sorry.
Sad fact is that like hookers and carnies, you need to watch yourself around the other players or you will find yourself light of wallet or short of wins. If we could have honest and honorable players we would not be worried about fair handicaps or silly rules like pocket marking.