What happened with the rule that pax baggage could not remain on a flight if the pax was offloaded?
They were offloading the baggage, not the passengers. That's the first thing. (I think you've got this the wrong way around - the baggage is only a problem if the passenger doesn't turn up at the gate, not the other way around).
Secondly, the baggage can be carried on another aeroplane, even if the passenger isn't on board, provided that the passenger was not aware of the the fact beforehand. Once they decided not to carry the baggage on the flight, all those pieces of baggage officially became 'mishandled' baggage and thus there is provision to carry on an alternative flight, provided that it has been designated as mishandled load.
It does raise the question though, if a passenger fails to board QF9 and their baggage has already been designated as mishandled and re-accommodated on another flight, should said baggage be offloaded from that flight?? (On the basis that their failure to board is for notorious reasons and thus any 'device' might 'go off' on the flight being used to repatriate the 'mishandled' baggage).
The whole idea of passenger and baggage match is that the passenger offloads, the bag doesn't fly.