Three cases:
1. South bids 1♣ insufficient and West accepts by bidding 1♥. Now South notices the insufficient bid and without a pause for thought wants to change it to 2♣ Stayman.
This one is easy. Both 1♣ and 1♥ get cancelled, South gets to bid 2♣ and 1♥ is UI for NS.
2. South bids 1♣ insufficient and North / East notices the insufficiency. The director is called but before he arrives, West says he will accept 1♣ and bids 1♥. Now what?
3. South bids 1♣ insufficient and West points this out. South corrects it to 2♣ again and West calls the director, saying that we wanted to accept 1♣, as allowed by Law 27A, which says:
Any insufficient bid may be accepted (treated as legal) at the option of offender's LHO.
The Laws seem to suggest that the solution for (3) is to allow West to bid 1♥ and then afterwards allow South to correct his bid, giving East a free shot to take advantage of the 1♥ bid. Is that correct?