I agree with you 100% about letting the second one land. In my experience it's better (and safer) to cop the runway sep breakdown than have 2 in the air on upwind.
I am am not familiar enough with goldcoast to speculate any more. I understand it's in as a LOSA so I assume there was visual sep but it wasn't what you might call "ideal" conditions, or that it wasn't assigned to the pilot.
Either way, it's one of those situations you never let happen again (or at least try to avoid at all costs
)