The Yankees acted rashly for several reasons -
1. Hughes has been pitching very well lately (in his last four starts): 23 innings, 3.91 ERA, 7 BB, 23 K. And if you discount his one awful start, his ERA on the season is a fantastic 3.55. Wang has allowed three runs in eight relief innings. What Hughes has done is far more impressive, and he deserves to continue starting until he stops doing the job.
2. It stunts Hughes' growth to go into the bullpen now. He needs to get at least 150 innings this year if we want him to be a starter throughout next year (he's at 54 now). You generally don't want to increase a young pitcher's workload by more than 30 innings a year. 150 this year allows 180 next, and then 210 (a full-fledged starter).
2a. The move also prevents Hughes from working on his tertiary pitches, which he'll need as a starter. As a reliever, he'll primarily be throwing fastball and curveballs. The cutter and changeup (essential for starters) will suffer as a result.
2b. Hughes has a higher upside than Wang. He was the top pitching prospect in baseball a couple years back, and finally seems to be healthy and (hence) getting his velocity back (his fastball has been more than a MPH faster than in either of his previous seasons). By throwing out of the bullpen, he doesn't get the wisdom of getting through a lineup several times. Wang has been a very good pitcher, but not a true ace in the sense of CC Sabathia, Johan Santana, Roy Halladay, etc. He was the Yankee 'ace' in 2006-07 by default; he had an ERA+ of 123 in those years - very good, but hardly 'ace'-worthy. Phil Hughes could be a true ace, and the more experience he gets (i.e. the more innings), the sooner he'll reach that potential.
3. If Hughes dominates in the pen (a probable scenario), will it trigger a new wave of 'Hughes the reliever' stupidity? I'm so sick of the Joba Debate that I couldn't tolerate another argument of the same type regarding Hughes. Please remember, Hughes is relieving because the Yankees have too many starters, not because he's a long-term reliever. And he's not going down to Triple-A because he already dominated that level; he'll learn more by relieving in the Bigs than by starting in Scranton.
Now go ahead and tell me how wrong I am.
(For an opposing view, see 'Why Travis is wrong.')