MaxAlt,
You contradict yourself and have nothing to support your premise that what your mate experienced was dangerous, let alone the situation "crazy". If there is (as you admit) 500' vertical separation with your mate below, then those two aicraft aren't getting "vectored onto the same point in space", as you insist. In recent memory, the only ATC-generated midair involving two aircraft under it's positive control didn't happen in the U.S., and those Swiss-control controllers couldn't even claim being busy.
Perhaps your mate and you aren't aware that for the Cherokee to be cleared into and fly in Class B airspace it's equipped with a working Mode C transponder and assigned specific altitudes/headings just like IFR traffic. Given his slow speed, altitude deviations (a misset altimeter, perhaps) would be noticed at the protected airspace boundary long before your mate arrived, and entry to the Cherokee would have been denied.
The terminal-area threat of misset altimeters is mitigated by U.S. airspace having FL180/18,000' TL/TAs, unlike the UK and Europe where fiddling around with altimeter settings is done at low altitude by arriving and departing aircraft. Doing so only adds to workload, and is as unnecessary and archaic as "reporting established" in a radar environment and feeding me unwanted and uneeded track mile information.
If he had trouble finding the nav and anticollision lights of an aircraft as close as you say from below due to "thousands of city lights", then your mate was flying inverted. If he can't discern the difference between the colored nav and anti-collision lights from the stars, then he needs glasses. Or perhaps he wasn't looking out the window at all, because it's far, far easier to spot traffic at night when it's clear (now it's my turn to return the favor and question whether you're a pilot if you don't know this) especially when they are above you.
Also, please inform him to brush up on his regs and apportionment of cockpit duties to remain in compliance, because in U.S. airpspace (even while under IFR rules) while in VFR conditions "see and avoid" still applies. Since Cherokees don't overtake heavies, on a clear night your mate should have seen him visually (and on TCAS of course) long before it squawked and seen there was no threat despite an electronic hiccup.
ATC probably even advised him of the traffic, yet he took umbrage that a pesky little Cherokee was demanding his attention. In fact, you keep highlighting the "light-aircraft" so often (wide-body/heavy and light-single/cherokee) that it's clear you seem to think that this disparity in size is relevant in some way. It isn't relevant. Why do you insist on thinking it is?
You do realize, don't you, that in the U.S., 500' vertical separation is the standard between IFR and VFR traffic all the way up to 17,500', and that outside Class B in VMC the VFR traffic might not be talking to anyone?...or even on a flight plan? Horrors!
(Tell your mate to keep his eyes peeled down in Indian Country)
Lastly....following an R/A will not "likely" require and climb or descent....executing one requires a climb or descent every time. It's also not considered an "altitude bust" to follow one, and any subsequent conflicts with other aircraft are resolved in turn. The new, required software also will reverse an initial R/A command. And if following an R/A injures pax or crew, they're not doing it right. But since there was no danger of a collision in your mate's case....and if he'd been paying attention and looking for traffic, he'd have determined that long before he received it, confirming to himself something the controller already knew.
It was legal, it was safe, there was no incident or loss of separation. Thus, no feedback to your mate or is company required. No doubt his equipment sensed a transitory condition like an slight bump in altitude where the software predicted a trend (where there was no actual trend). Just as a too-swiftly climbing/descending aircraft just prior to level-off can produce a momentary R/A with proximate aircraft (hence, the advisories to limit the rate in this regime), you're friend's was undoubtedly one of these momentary events. It probably disappeared faster than he could react. We've all experienced these, but hardly make a federal case out of it, as he (and you) seem to want to.