As long as they pay their UIL dues, they are still part of the UIL....although the UIL does take a very dim view of schools who do complete a Varsity district schedule in a sport that they have committed to play. They can play non-district although it probably will be VERY tough to get a schedule of more than a few games put together as they will have to pull off getting 5 varsity teams who 1) have less than 9 games on their current schedule AND 2) don't have a district game that particular week. So you will probably see Sabine Pass with a number of JV teams on their schedule in the latter part of the season.
Of course, what has rankled the other teams in 12-2A-II (excepting, probably, Burkeville) is that they will have to find another game to fill their schedule by finding teams that 1) have less than 9 games on their current schedule AND 2) don't have a district game that particular week, as well.