Sniffer, When the opponents coach approached you and started ranting, I wonder how long it was before the referee realised the situation that was developing, because he should have gone over to the coach and told him to move away from the line that you were patrolling. From your report into what happened, it is clear that the referee let you down badly. He should have backed you up, as you were assisting him. It is pointless reporting the opposing coach if he did not take action at the time. He has left himself wide open for an appeal. If I was you, I would bring the incident to the attention of the Referee's Secretary of the league in which your son's team play in.
Offside causes more arguments than anything else, particularly at local level where there are not official assistants appointed. The referee was right to ask you to hold the flag until you knew who was receiving it. The change to law was brought in to stop assistants flagging a player offside who was not interfering with play. It can get confusing when first and second phases of play are brought into consideration, but my advice for assistants is simple. Hold the flag until the player receives the ball or is directly interfering with play. For example, being in the goalkeepers line of visiion. The only time I would ask for an early flag is if a player is chasing the ball as it goes towards the goalkeeper. Stop the game early to prevent a risk of injury due to a collision.
I hope that clarifies things a little.