Police don't need much in the way of "probable cause" to search your vehicle. Reasonable suspicion alone may suffice. I think Rev may be on to something regarding them being able to search your vehicle based on their jurisdiction, but I think it's any police officer that needs to simply have a "suspicion" to search a vehicle. I believe that is part of the compact you enter into when you get a driver's license.
The lights on your license plate is a pretty standard thing. I've been pulled over for it before, too.
And there have been recent cases that went to the Supreme Court over whether reading someone their Miranda rights was necessary. Unless Dave was officially in custody and being interrogated, they don't have to read him any rights.
That being said, fugg local law enforcement. Being pulled over just because someone looks a certain way is plain and simple discrimination, regardless of why you get pulled over. If a light is out and it should be working, give someone a fuggin' ticket and be done with it. A*holes.