What I don't understand is why the cabin crew decided to move the TWO passengers already seated and settled in favour of the one who had just arrived.

Surely it would have been easier (and quicker) for all concerned to move Mr 1K as he was still on his feet.

But yes the OPs wife allowed herself to be treated like a doormat - her right to her allocated seat was if anything greater than the late arrival - if only because of the extra space in the front row.