It is the person's name and bio info that hits in the system. Dual citizens often get caught because they apply for a visa nder one passport, ie: Australian and then apply to enter the US using a UK passport.

Once a person applied for and is denied a visa, they cannot use the visa waiver program. On the ESTA aplicaton, one question is if you applied for and were denied a visa.

Entering from Canada, Mexico ect.. a person will still be inspected with the person's name checked in the TECS system.

Would not try it if were me. Go back to the US embassy to see if you can overcome the denial.