CS, Have you read Squeezy's T&Cs?
I just tried to find what they say in these circumstances. There is some stuff on denied boarding, and a link to another page with their interpretations of the Regulation. Finally I find the rule on what happens for an overbooking, but not when passengers are denied boarding for other reasons, such as this.
I expect one reason they got no volunteers at £100 was because some were aware of their rights. But for EZY to sit there and let their other passengers reach into their wallets, when it was their responsibility to deal with the situation, THAT was unethical.
Yes I know they are a business and yes I know that ethics in business are almost nonexistent anywhere. But that isn't going to stop me from my comments.