A few years ago I had a conversation with a respected referee who told me this story. He was doing a youth match and a player got injured. The players were not savvy enough to kick the ball out of play so when the ball was near his feet HE kicked the ball out. I never had the courage to ask him why he simply didn’t use his whistle.
At the professional level there are good reasons for allowing the players to stop play for an injury. These include the fact that these players are masters at gaming officials and that the Law requires that if the referee stops the match for the injury that he ensures that the player is removed from the field of play.
At the youth level, particularly recreational but also some competitive matches, the players are not gaming referees, that is, they are not faking an injury to stop an attack. In addition, with unlimited substitutions available in youth play, a team does not have to play shorthanded because the referee made them leave the pitch. They can simply substitute for that player, should they desire, or they can play shorthanded until the match is restarted and the referee permits the injured player to reenter the match.
Referees must stop play when there is an injured player. Our number one responsibility to the game is safety and we simply cannot wait for the players to do our job.
Your question (paraphrased):
When a player down with a minor injury instead of blowing my whistle I try to get the players to play the ball out and then on the throw-in get the other team to throw the ball back to them. Is this bad?
USSF answer (December 12, 2006):
No, this is not bad, but neither is it sanctioned under the Laws of the Game. The referee has no authority to direct the players to put the ball out of play or to tell them to play it back in to the other team to restart.
It is the job of the referee to stop play for injury, regardless of what players may or may not do, only if a player is, in the referee’s opinion, seriously injured--keeping in mind the age of the players. There are considerable practical differences between the referee stopping play for a serious injury and players stopping play for what they believe is an injury. If the players do it on their own, there is little the referee can do to control it, at least as the Laws read now.
Source: USSF Ask a Referee