Leadie,
This is an example of reasoning that is almost completely disconnected with real-world risks and real-world risk mitigation.
Now, add night time to that equation. And it wasn't CAVOK. And add in that procedural separation required a level change to mitigate the risk of MDX running up the back of AZC. People win the lotto everyday, so whilst the odds are small, they do come up. I personally had an F100 shaped hood ornament near Mt Isa a few weeks back, and that was during the day, in 8/8ths blue sky.
The ATSB archive has plenty of mid-air collisions for you to peruse that would indicate that the sun has burned out for quite a few people over the years. With the millions and millions of cubic airspace that Australia has, there are still people trying to break the laws of physics that says 2 bodies can't occupy the same point in space and time as each other.
And let's think really hard about what option should have been obvious to him and offered to him in the circumstances of being unable to proceed in VMC beyond Williamtown. Any guesses?
My guess, would be a bad case of press-on-itis. Which the PIC caught, just not over the coast, because of the decisions he made. He was offered and given tracking options for a landing at Williamtown when sh!t got serious, but not so serious that he couldn't get out with nothing but a minor scare, but, once he thought things would be fine, the PIC declined that offer, and elected to 'continue on our original flight plane, via Singleton'.