Is that based on any 'inside knowledge'?
Just based on the information in the report. Figure 1 on p 2 and figure 2 on p 4 show the relative locations of the aircraft. Eyeballing each point it looks like XGA was behind.
Table 2 gives the altitudes, Time 3 was the TA with ZPJ at 733' on base, XGA at 1300' on a 3.5 miles final. I don't know the exact approach speeds, but I would guess that from 3.5 miles XGA could slow down enough to give e.g. 60 seconds spacing at touchdown.
However, with a closer look at the figures something looks sus. The positions were taken from ZPJ TCAS I think. They have XGA doing 2.4 miles in 43 seconds, or about 200 knots - in a GA8? I'm not sure how accurate those positions really are.
If XGA appeared stationary in ZPJ's cockpit, ZPJ would have appeared stationary in XGA's cockpit, thus raising the question whether the pilot of XGA's opinion was correct (even assuming XGA saw ZPJ and had that opinion).
Why do you think they were "OK" in that circumstance?
On a collision course they appear stationary right up to impact. However, the further away you are the smaller the angle of any movement, so depending on distance the movement might be hard to detect. I don't know how long they spent working out whether XGA appeared stationary.
Also they were about to turn final, so if they were on a collision course before changing direction, pretty much by definition they would not be once they turned final (as long as they didn't collide on base, obviously.)