Of course, Scaramouche is exactly correct, but I would like to add another point or two to this topic.
First off, you stated that you were playing in an American snooker doubles tournament. What the rules are for this tournament is anybody's guess; the only real authority for that would be the tournament director. American snooker rules tend to be very localized, you stated as such about the wacky "ball in hand" rule. Posters of this snooker forum generally (but not always) accept the IBSF international version of the Rules of Snooker. There is no way for anyone in the "cyber world" to know what your "local rules" may be.
Secondly, if anyone committed a foul according to the IBSF rules, unfortunately, it was you (although as you will see, your "foul" is just poor etiquette and not to be penalized with the award of points; you should just know better next time). Another quote from the Rules of Snooker, in this case, Section 3., Rule 19.:
"19. Interpretation
(a) ...
(b) ...
(c) When there is no referee, such as in a social game, the opposing player or side will be regarded as such for the purpose of these Rules."
What that means is that there is no way that the old guy should have been spotting his own blue ball in the first place; according to the rules, it is YOUR JOB as the opposing player to spot that ball. But in any case, you are also viewing the situation incorrectly in that you think you saw YOUR OPPONENT spotting and subsequently re-positioning the blue ball. You did not. What you saw was THE REFEREE doing so. Any player acting as the referee by definition simply cannot commit a foul. A hypothetical...let's say your opponent potted the blue so you, acting according to the rules, retrieve the ball and go to spot it. But you accidentally drop the ball, it bangs into a cluster of reds and a comedy of errors ensue. Foul? Absolutely not. Acting as (an admittedly clumsy) referee, it is not possible for you to commit a foul. In the same way, it is not possible for your opponent acting as referee at that instant in time to commit a foul, even if he had retrieved his own ball and perpetrated the comedy of errors, he still committed no foul as a player, therefore, after you all do your best to get all the balls back where they belong and finally get that blue spotted, he would still continue his break. On the other hand, say he potted the blue then you did your job and spotted the blue but say it rolled off a little when you released it and he noticed but you did not. Properly, he should ask you to check the spot of the blue. Alternatively, if you already sat down in your chair, he might say something like, "I'm going to re-spot this blue. It moved." and he does so acting as the referee. But if he doesn't say a word and just moves the blue whether by hand or cue or using a pair of tongs or anything else because he doesn't like the position after you had spotted it, THAT would be a foul because he was the striker (shooter) at that point in time, not the referee.
By the way, there is also no such rule that the balls "are live again" once you spot and release them. Professionally, it does happen on occasion that a player will ask the referee to "check the spot" usually because the spotted ball is causing some interference to the red he plans on playing next so he is hoping that a re-spot may be just a tiny fraction more generous. And the referee for his part will usually comply rolling the ball off its spot, trying to place his eyes and body into perfect position to be as accurate as possible with the spot, then re-spotting. What you WILL NOT see is the referee checking the line of interference that the player is concerned about; the referee's only concern is that the ball is as accurately on the center of its spot as possible so the tactic could potentially backfire on the player adding even more interference. However, to take this scenario to its extreme, once a player has accepted the referee's spot, now the balls are "live again" as you stated and what that means is, for instance, if the black is spotted, the player takes another shot at a red, then the player asks for the BLACK to be cleaned, you will see the referee take out his marker to mark the position of the black before picking it up to clean it even though it is theoretically "on its spot". Since that black is a "live ball", it must be replaced to its current exact position using a ball marker even if it appears to be on its spot.