My reasons for following the exemption and not continuing NP/NP now that UIL has exempted it:
1) UIL Concert and Sight-Reading Evaluation is NOT a contest involving head-to-head competition. It is in fact an evaluation versus a rubric, the same as an essay a student writes and submits on a STAAR/EOC exam. There is a standard, and we are evaluated against it. I know some caution against it, but I look at our C&SR being very much that evaluation for how we are teaching.
2) This event truly is completely curricular in regards to what we are teaching. Are we teaching the TEKS? Would your principal know? (Unless they're a former band director probably not) You are working on literacy in preparing for Sight-Reading, and this is a measurable tool to use. (It may be imperfect, but it's generally pretty accurate)
3) NOT EXEMPTING kids will lead to the other students being penalized in their own academic growth. This isn't like a sport where a team meets after school or before school for practices. Generally the bulk of preparation for C&SR takes place in the classroom. Not taking the other kids will result in a poor result/experience for those students.
If you really want to burn some bridges ask if they take ineligible students on 'field trips' to colleges, museums, etc. Ask them to justify that if they want to hardline it.
In the end if your HD isn't onboard though, just don't register that band for contest. Especially this year I know a lot of schools whose non-varsities just aren't going to make it. Our 1C NV group I teach has a lot of growth they've made, but with a 2 week shutdown for the unexpected 'winter break' we just had, I'm not taking them even with not worrying about NP/NP.