Couple of things bealiba: I don't know the specific occasion because that sort of thing (diversion due weather etc) does happen from time to time no matter who you fly with but,
1) the company does not like their aircraft conducting multiple go-rounds trying to get in during marginal weather regardless of how much fuel they have, as the punters down the back have been shown to get quite panicky when this happens. They would rather you divert, get on the ground, refuel & get the passengers there later.
2) the vis you saw out of the side window doesn't tell you what he was seeing out the front. Low clouds consistently rolling through? Fog forming over the airfield? You can't really tell. In any case he assessed that there was no guarantee he'd get in off the next one either, and obviously elected to divert before he started burning into his diversion fuel. You don't normally carry enough fuel for multiple approaches and a diversion too. This is a waste of money & time.
Avalon may have had similar weather probs (its not that far away from Mel after all), not enough fuel/ground handling services, no ATC available, etc, etc. A perfectly sensible and normal decision.