If they don't have class seperations (you would be in the open class) and it's pins only, yes your cheating. If they allow scopes/lenses, no your not cheating.
Unless they have a rule that forbids electronic sights.
It's really simple. Play by the rules or don't play. You signed up and paid your entry fee which signified you were prepared to abide by the rules of the league. You have been informed that the red dot sight is not legal under those rules so the option is now yours. To acquire sights that meet the league's rules or not.
To my point of view, if you've decided you'll refuse to use sights that are legal, then the shop owner is not obligated to return money he accepted from you in good faith. In fact, I'd say he's being pretty lenient with you because he could have simply disqualified you and sent you on your way. I'd also say that it has nothing to do with you buying an Onieda instead of a Mathews. It's his job to enforce the rules.