Uh, the AMA is an organization. They are not a government ajency or affilliated with the government or laws in any way. They do have the right to set down rules and grant or deny membership based on those rules, but they in no way have any authority over any individual beyond that scope. If some people want to go somewhere and fly a bunch of 100 lb. jets at 500mph, they (the AMA) have no say what so ever. Now, if there are specific laws governing such activities by federal, state, or local governmets, of course those would have to be followed. In the case of a club cancelling an event, this is a private club and they can make and follow whatever rules they like.
Why are autos allowed to race? Why are full scale jets allowed to race? Why are sailboats, big rigs, jet powered cars, motorboats and pot bellied pigs allowed to race? Why can someone go out and build a 28 foot winspan X Wing four engine rocket fly? Because there are no laws that prohibit it, and I'm sure there are no laws that outright prohibit high speed jets either. It may be difficult to find a venue for it, but that's a different matter.