I don't know, of course, precisely what the will states. It would seem, however, that the executor may have overstepped his bounds. In strict answer to your question, no, an executor cannot do anything he wants. Usually, the will will state the powers of the executor. State law will supply additional conditions that usually limit those powers in a variety of ways.
The fact that the siblings believe they "deserve what they have taken" is, as you recognize, of no moment. There is no cosmic definition of what one deserves (or, if there is, it is beyond our ability to recognize), so what they should receive in this case is precisely what the will states.
You should consult with an attorney in your state as to whether it makes sense, under the circumstances to seek to remove the executor for improvidence or other cause.
Please note that I am a NY attorney and cannot advise you as to your state's laws.
You should get with a local attorney and have them review this issue as soon as possible. In general, the Executor is bound to do exactly what the will states, and he has no power to distribute assets in a different manner unless all the beneficiaries agree to the same. In this instance, I would argue the Executor's gift of additional assets to a beneficiary is a personal decision of the Executor and those gifts should be deducted from the Executor's share, but as always, the law of your state may be different.
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