Is this just a set of over officious crew trying to make passengers lives as miserable as possible, being unable to back down and admit they are wrong?
I have to admit that it sounds as though you are correct, and that somebody was rather overly zealous (at least) in their interpretation of the rules, and then having mishandled the situation, had backed themselves into a position from where retreat was difficult. The first rule of confrontation is to give yourself, and your immediate superior, if called in, room to manouever, backwards if necessary. Although I haven't seen the needle in question, I can't imagine that I would have done the same as this crew.
The only thing that I would disagree with is your assertion that the crew might have set out with the
intention of making pax lives miserable. This appears to have been the effect, due to a misplaced sense of duty, or a misunderstanding of the rules, but I doubt that the Crew went to work that day (or any other) with the specific intention of making pax miserable.
I'm anxious not to attempt to defend the indefensible, but am trying to assist with "background". Many rules can be complex, and open to interpretation: Cabin Crew are human, and therefore make mistakes or have a different understanding.