Very nice story.
It may be permitted to be Mechalel Shabbos to save another Jew from becoming non-frum. (See Mishna Brura O”H Siman 306 S”K 57)
Harav Yechezkel Abramsky ZT”L once made a phone call on Shabbos to save a frum girl school from closing down – as the other girl schools wouldn’t have kept the girls frum.
Of course, you need wide shoulders to be able to decide when to apply this hetter. This Rebbe obviously has them.