I have not seen anything that underlines this quote.
In fact, the HOST and only the HOST affects the rules from what I know.
However of course he can listen to his judges and CHANGE the rules of the FIRST post and everyone can be notified by a POST telling of the rule change.
By the way, it's also up to the Host and the judges to notify a user if his entry does not fit the theme or does not follow the rules. That's the normal way the Hive handels it and I do not see any reason why this should be different here. Especially since you changed the rules, this becomes even more important.
Pharaoh_ asked a question directly and got an answer of you, telling him, that he could continue the way he did, now he has the right for sure to be notified in case of a rule change.
On a second note, I am pretty sure such a detail in the contest rules should have been changed BEFORE the contest did start. A rule fix should only happen, if there are visible loopholes, unclear rules or other issues that could effect the success of the contest.
I can fully understand Pharaoh_ 's reaction and hope for a rejudge of his entry for the sake of this contest ending fair and Hive - worthy.