This could be an interesting one.
First, the 10% rule is still used in Alaska, I am an A&P, know lots of people flying up there and several Feds from the FSDO there. Now, the 10% rule is almost always used for ferry flights, as flying out of ANC is one way that people get airplanes to Hawaii.
They take airplanes to ANC where someone puts a "toyko tank" in the bird and the local FSDO signs it off for ferry to Hawaii at 10% over normal gross weight. Its not normally done for normal operation but usually on a one time or ferry flight. Thank God that I never had to resort to doing that to get flight time or crossings as its long boring flying and a long swim back should the engine cough.
Second, regarding the annual. If someone owned a plane and asked me to fly their family in it, do you think that the owner is going pull me aside to say "hey, its out of annual but everything is ok, just get in and fly!" The pilot was probably told that "its ok, everything's fine, have a good flight," so lets stop jumping on the pilot for the plane being out of annual. Unless he had been told that it was out of annual AND a witness heard it being done, then that one will be throw out by a first year lawyer.
He was not correct in having 5 people and only 4 seats but you know it was in Alaska and the rules involving flying get bent, much of the time. In a court of law the lawyers will eat him alive but the kid survived the impact. He then did not grab his life vest and complications from that is what cost him his life.
Years ago I was jumpseating on PanAm from Frankfurt to Berlin after having non-rev'ed across the pond on vacation. Captain had a group of non-revs standing at the gate. He asked how many were we? We came up with 12 people and there were only 4 pax seats available in the plane. It was the last flight of the night to Berlin. He said "I commute to work and no one is going to be left behind." Two of us got in the jumpseats in the cockpit, every extra flight attendent seat was filled and two lucky people sat in the potty for takeoff and landing. It was illegal as hell but done more often than we care to admit. Yes, I know it would probably not ever happen now but it did then. When nothing happens on the flight, everyone walks away happy, like should have happened in this flight.
Sorry to see something like this happen as everyone involved would much rather have had a good flight, landed at the dock, gone inside and had a sandwich and a pint. Sometimes it does not happen.