Put another way, if Jeremy didn't contribute anything, then why did Kyle start working with him in the first place? Put him in the YC video? List a planned 50/50 equity split in the YC application?
These seem to be at least reasonable questions IMO.
All that said, I think the issue here is that Sam Altman personally invested in Cruise, which creates a subtle conflict of interest. It's in Sam's best interest as a Cruise director to crush Jeremy, but perhaps (as the parent suggests) it would be in YC's best interest to just stay out of it (above the fray).