Someone somewhere is making a decision to over-ride the goodwill shown by the GM. This would be a higher management decision, and depending on SE's policy, their hands might be tied. If it is made known from high up that no exceptions are to be made in the case of ToS infringements, regardless of the whys and wherefores, then so be it - nothing will ever change that situation.
The lesson to be learned here, is if you have suspicions as to whether you can do something like dupes/hacks or what have you, do not attempt it even once. This is because just because you can do something, it doesnt mean you should. If your friend had have just reported it, then the GMs would have been able to test whether the theory was correct, and he would not have done anything to get banned.
They can't make exceptions, because if they let this guy off, they'd potentially have to let dozens, if not hundreds of other off too, if they knew of the bug and exploited it. I can't see how SE could make the distinction between an honest hacker and a dishonest one based on the words of the player alone.
I have real sympathy with this situation if what you said is accurate, and I have no reason to believe it is not true. The problem is, SE operate a no tolerance policy where proven, and it was proven, so I am pretty sure the ban will never be lifted.
