I'm not sure if he's allowed on the sidelines. He's no longer on the team.
He goes from making either $44k or $88k, to making $0. That's big money for a guy at his level.
And i'm not sure he wouldn't have played. There was some debate about whether he was going to be active, or Chad Johnson. I think Belichick is smart enough to realize that the media would have ran wild if he had cut Johnson, so it's possible that he figured "fuck it, neither will play much if at all, so i'm not making this a circus".