If CBS was truly bothered by that behaviour, they wouldn't have shown the episode or would have deleted that piece of it and said that Jeff had withdrawn from the program - which he did before he could be voted off. They have many hours of film per episode and could easily have filled in the time. They chose to broadcast it and, by doing so, got a ton of free publicity from the media when most people wouldn't have even known the show still exists let alone watched it.
I'm not sure where I stand in relation to Jeff's situation. On one hand, I can understand that he might not have been ready to go public about his gender orientation. On the other hand, however, he had to know that, if someone found out, there was a very high possibility of it being used the way it was. It was a gamble he took that didn't pay off for him.
The question I have is what have they signed when they go on the show that would either protect or remove the protection of their privacy and any other rights they have?