My twopennorth as an RAF ATCO, having read the Airprox Board report.
They (the MC-130, the GR4 and the parachutists) were all allowed to be where they were and the two ac captains were determined to exercise that right (the paras probably had not so much choice once the doors were open). The Board commented that perhaps the GR4 might have given the others a little more space, which seems fair to me as it is much more manoeuvrable than a Herc in para configuration. However, he chose not to and said that he "had every right to be here". Airmanship, anyone?
I am slightly confused as to why the Herc was working two ATC freqs (London Mil and Marham App). He was presumably talking to his DZ party on abother box as well. The GR4s were on Marham Dir. The two Marham controllers did pass traffic information to each other but IMHO this might have been solved by all talking to the same controller.
Of concern is that the controllers did not consider it to be a reportable incident. Someone called "Airprox" so it is a mandatory report whatever the controller thinks. I am also concerned that the Sup was short of controllers so elected to work Zone himself and downgrade from a Supervised watch to having an ATCO ic.
The way I read it is that the Herc captain was showing due concern over his charges (the paras) but expected more protection from his NOTAM than was due; the GR4 shoud have shown a bit more class and allowed a bit more elbow room; and, most importantly, Marham and Mildenhall need to talk more.
http://www.airproxboard.org.uk/docs/423/2013155.pdf