FormerFlyer
My best guess how it happend:
He checked in at MSP for the second segment at the time, when check-in for the first segment at Duluth was still open so effectively ticket was not cancelled at that time.
I believe that system is not that smart to deny such things because it is legal and possible to check-in for the first segment only (i.e. Duluth-MSP) and fly. Then collect your bags on arrival to MSP and go to check-in in order to check-in for the second segment (MSP-LGW).
Why he was not reinstated? Exactly for the reasons why such restrictions are existing.