As I see the case, the issue of bug exploitation is a given. However, I also believe there are circumstances that should be taken into account when considering punishment.
First: The development team has - so far as Delvin, Foundation, or myself are able to recall - never resolved issues of allegiance for any reason until the new estate hierarchy enforcement earlier this week.
Second: The region's allegiance was not changed for a full twelve hours after a bug report was filed, acknowledged, and fixed on the bug tracker.
Third: After the bug occurred, the character in question had only three paths. He could do nothing, step down, and change allegiance. Examining these three options, I believe there is reason for leniency.
The first option - to do nothing - would result in the character being stranded in what was until then an enemy realm without any of the background and context (or even characterization) which precedes such treason.
The second option - stepping down - would result in a loss of H/P for the character, effectively harming the character. Personally, I have trouble understanding how any expectation which requires a player to harm their own character as a result of development errors can be considered fair or reasonable.
The last option - to change allegiance - is then the only reliable action available to him which both maintains the character without harm and resolves the issue of the bug.
For these reasons I believe that exploitation of the bug was in fact encouraged by a combination of developer policy and the nature of the bug: circumstances which I feel should have significant weight in deciding appropriate punishment.
