MarkMagic,
Yes it was a fair ruling, albeit a bizarre situation, Player C would be ejected and barred for such behaviour anywhere I run or play.
K-Lo,
I've had this happen once in a tournament, albeit slightly different circumstances, where a table was accidentally 'coped' for want of a better word. The end result was there was some disagreement towards who had what and where, There's not much we can do except calm things down and get the players to agree what they had, if no decision can be agreed then we need to decide for them, in a cash game the dealer should have a very good idea of how their tray was rowed, so that should be reconstructed first if it has been mingled with players chips, hopefully a camera will be covering the table in order to aid in the distribution of chips.
I would also issue a new deck and colour to that table to maintain some integrity.