To: Bus 429
I would think it to be perfectly legal as long as the log entries are made in the respective logbooks. This process is calculated into the reliability assessment for a given aircraft. It is called MTBUR or the unscheduled removal of a part due to improper or faulty diagnosis of the problem.
Under normal circumstances the mechanic will make the correct diagnosis of the problem and he will draw a serviceable component from spares and install it on the aircraft. The defective part would then be sent to the next level for diagnosis and repair. In the case you describe the diagnosis was tentative or possibly wrong and the mechanic would swap parts to verify the original diagnosis. If it proves to be wrong, the part originally removed as serviceable will be returned to the cannibalized aircraft and the suspected part reinstalled in the aircraft and the diagnostic process would continue. It is all legal, but records of the switching of parts must be logged so as to know that the parts were swapped and eventually returned to their original positions. This swapping of parts may eventually cause operational problems due to mishandling or improper connection / disconnection into / from the system. That is one of the reasons why it is necessary to maintain the removal replacement records.
Of course this is all contingent on company policy.
By the way, I have an A&P license.