Sport- You keep saying a "go-around" should be done at altitude. I think that kinda defeats the purpose of a "go-around." A "go-around" is used when something is preventing the aircraft from landing safely on the runway of intended use. So a "go-around" can be executed at one foot. Although in this case it does not really matter what the Biplane pilots intentions were, common since says RC airplane should land at the first sign of full scale activity
A go around is just that. Passing over the airfield with no intention of landing. You are describing an aborted landing, then go around. Not the same thing as when you announce a go around with no intention of landing. A go around can be done right over the runway, but not when you know there are people within 500 feet, which he should have known from his first pass. In this case as with many airshows, aircraft activity is ongoing through the RC demonstration, so it is not the criteria. Neither the AC nor the AMA rules say you should do this when aircraft are some distance away but in sight, only to yield right of way. IMO the term means you can operate an RC aircraft in view of RC aircraft because Part 91 says you should manuever to avoid aircraft, not land. However as a good safety precaution I agree with you.