Can an airline move a flight time up 2 hours with three days notice?

When you book an airline ticket, you agree to the terms of a contract with them, the "Conditions of Carriage," known by a variety of names.

According to Boutique Air's Operator-Participant Contract, you are entitled to a full refund of the ticket price if they make a "Major Change" prior to departure. Unfortunately, a two-hour schedule change is not "major" according to the agreement.

The following are major changes: (1) a change in the origin or destination city, unless the change affects only the order in which cities named in the itinerary are visited; (2) a change in the departure or return date unless the change results from a flight delay experienced by the "Air Carrier" (If, however, the delay is greater than 48 hours, it will be considered a major change.); or (3) a price increase of more than 10% occurring ten or more days before departure.

It was not clear whether both your LA flight and your AOO flight were on a single ticket, or booked separately. On a single ticket, you would likely have been re-accommodated on the next available flight (which it seems you would have refused), or been offered a partial refund (which it seems you accepted).

If you bought the AOO flight separately from your LA flight, you assumed all responsibility for failing to make the connection. After all, your LA flight could have been delayed or canceled, or rescheduled for a different departure, and that would not have been Boutique's fault.

For what it's worth, Altoona is less than two hours' drive from Baltimore, so if I were in your shoes, I would have rented a car and driven home. That would have been far cheaper than booking a new flight at the last minute, especially for two people, and gotten you home faster than just about any alternative, seeing as Boutique is the only airline that flies BWI-AOO nonstop, and only does so twice a day.