I'm going to play Devil's advocate here.
You are asking two questions here. 1) Is this collusion? 2) Should we allow this?
1) Yes this is collusion of two teams 'combining' rosters to fill gaps in each others teams.
2) Unless you have specific rules detailing that this is not allowed, you have to let them do it. As others have stated there are checks and balances that keep stuff like this from happening.It appears that your league does not currently have. If it is not against any of your league's rules you should not stop them. Personally, I don't think you should be able to change the league's rules mid-season unless it is voted upon and wins unanimously.
In my league we have a set of rules for stuff like this and people have been kicked out due to breaking of these rules.
I think you let it go this time but put in some rules and reg that everyone agrees on to keep this stuff from happening.
RB- D. Brown-Benson
WR- Megatron-Green-Floyd (SD)