I don't think O'Neil pulled rank on McGinty, because he had it in writing that O'Neil wouldn't be able to change his players; I think McGinty was guilt-tripped into taking back Martell, because he thought it was the best thing for the team. Martell's actions in the movie don't show it, but he was supposed to be the best quarterback in the league, with 2 superbowl rings to prove it. McGinty used him because he believed (but didn't like it) that he wouldn't blow the game the way Shane nearly did against Detroit. After the first half, though, he realized that Martell wasn't working well with the other replacement players, and that he needed Falco back to have a chance.
As for why Falco wasn't on the sidelines, there are a couple of possible reasons. One, O'Neil said that "Martell and Carr have crossed the picket line". Carr may have been Martell's backup QB, and thus Shane wasn't needed. Or, Martell may have put it in his contract (which favored O'Neil heavily from his comments with McGinty) that Shane had to go. He was clearly jealous of Shane's popularity, success, and blooming relationship with Annabelle. I always got the impression that he crossed specifically to get rid of Shane, not becuase he got the deal he wanted.
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