I saw a similar sight last season when I went sailing on what started on a nice night but turned into a really gusty one. The launch driver brought my gf and I and another young couple out to our boats and the whole time we had to listen to the A-hole guy in the other couple brag about how he was upset it wasn't windy enough and bragging to his prob new gf at how much he loved the "high winds" sailing and how tonight would be "lame".
So they dropped him off at his 80's area Hunter Legend in the 33ft range and us at our boat which he kept like sh*t. Half an hour later we were the 2 only boats having a nice sail out in the Sound. Soon the winds rapidly picked up but luckily I was able to reef the main, then drop the main all the way and then rolled in half the jib in enough time.
Our bragging friend in the Hunter (who didn't seem to know what he was doing in the 1st place) didn't seem to have enough time as we right after saw his boat knocked down with the spreaders touching the water for a good 15 seconds. We continue to have a nice a spirited sail now with just a slab of jib out and we see him motoring in with the main ripped half off the mast and the genny in shreads.....I felt bad he ruined his sails but at the same time couldn't help laugh just because the guy was such an A-hole and wouldn't stop bragging back when we were on the tender.
With that said I don't think you (original Poster) could have done much of anything at that point as it seems the squall came in much quicker in your situation than it did in ours. It sounds like you guys did a great job and knew exactly what to do. It is scary though when you get caught out in something like that.
Just for the record...in this particular instance...the aforementioned a-hole was NOT me.