Someone took a risk and set their blocksize larger than 1mb. It was a foolish thing to do with the current state of the blocksize debate, but it only hurt the miner who chose that setting.
Isn't it the case that this was a *bug* in BU code, rather than the pool operator going gung-ho with larger block sizes?
AFAIK it was a bug. No need to sugar coat it.
I wasn't aware at the time, but you are correct. However, the bug did not harm anyone except the miner who chose to run BU. There is already a fix under review, and existing clients can work around it by reducing their configured blocksize by the size of the coinbase transaction. The bug was that the coinbase transaction wasn't included in the blocksize calculation when producing blocks. Blocksize was counted correctly when verifying blocks, so no other BU miners would have built on the block unless their blocksize exceeded 1000000 bytes.
This incident shows us two things:
1. BU needs more testing and better code review processes.
2. The consensus mechanism works as it should and punished the miner who attempted (unintentionally) to make a larger block without agreement from the majority of the network.