I visited the St. Louis Arch not too long ago (late 2004) and remember there were concrete barricades and Humvees surrounding the property, metal detectors at the entrance, and armed rangers standing nearby.
Seeing that the Buck was not only 2.5 inches in blade length but also an assisted-opening knife probably didn't help matters. Just curious, but you mentioned in your message that someone saw the knife and was alarmed -- was this the reason it was confiscated or was it at the metal detector?
National Parks (DOI) seem to be pretty strict about weapons, while National Forests (USDA) are more relaxed. Supposedly that's to allow for National Parks to retain their original wild qualities and accomodate hordes of tourists in a controlled (read: perceived "safe") setting.
What's too bad is that the NPS didn't allow your friend to turn around and leave minus a citation, or give the option to put his knife into an envelope and label it for his exit from the grounds (similar to the TSA). Then again, the NPS probably doesn't want to have to deal with the legal complications of holding people's possessions for them.
Best of luck to your friend and it's a good suggestion of yours to write our Congressmen and -women.
BTW - The NPS weapons regulations page currently has no information, it says it's being "updated":
http://www.nps.gov/pub_aff/e-mail/weapons.htm