All good points. Almost every city has laws on the books about regular meetings over a certain size. In most cases, they are stupid and overbearing, but also rarely enforced--unless it becomes an issue with other people in the community.
There was in issue here in Los Angeles regarding a house in a residential neighborhood, where some regular meetings of Orthodox Jews take place. They renovated the house (it was a huge house) to accomodate it for meetings--that's almost all it's used for--and the meetings are enormous. I would guess about 100 people. It's essentially a synagogue, but they escape because of the religious nature of their meetings. In this case, the neighbors have a right to be angry, as they are seriously impacted.
I agree that in this San Diego case, the religious nature of their meetings needs to be respected--but it's also true that if they are meeting regularly, and impacting their neighbors, there needs to be some system of recourse so that the neighbors are treated fairly.
Who knows what the whole story is, but the story that is linked is suspiciously scarce on details.