Two different things going on here:
1) The flight was overbooked and you were bumped.
2) Instead of QF, you took the JQ option.
Basically, 1) is quite common, they are allowed to do it and it is how they keep the fares down. If you are unlucky enough, they put you on a flight (much) later. Don't like it? Full-fare paying customers don't get bumped.
In this case, though it may not have sounded as such, you were given the option of flying on another airline and you took it. You could probably have asked for another "real" QF flight, but it would have been later.
I certainly would write to QF and complain about the extra stop and lack of food. Good chance they'll give you a voucher or deposit some miles into your account.
But as far as "legal" goes, I don't think they have done anything wrong. Their plan didn't come together for whatever reason and they did they best to get everyone where they wanted to go as quickly as they could.
People dont go and purchase a Lexus only to drive out in a Corolla.
No, but they do reserve a "Lexus or similar" from the rental place and end up in a Corolla. ;-)