Sure, the airline is within its right to cancel the confirmed reservations of the OP (and the other 25 passengers) because they failed to arrive at their connecting gate on time, due to the failure by US to keep to its schedule.

Nothing in the Contract of Carriage requires US to cancel their reservations but only reserves the right to do so.

Huge customer service failure by US Airways and the gate agent. The agent sounds like a petty functionary who enjoyed helping 26 passengers misconnect. Since the gate agent sounds like a compulsive liar, the agent could have picked up a phone, pretended to dial, and loudly "argued" with someone higher up to reopen the flight so that 26 passengers would not be inconvenienced. When that effort was for naught, the agent could have said "Well, I went to bat for you but management wouldn't budge."

The passengers would have been none the wiser and the agent would have looked good. Passengers would still be pissed at US, but no more than they are now.

And if someone wrote in to complain about the failure of "management" to authorize reopening the flight, and someone at US cared, and investigated, the agents' lies wouldn't sound any more ridiculous than the current facts, and that's an agent who is a liar and probably didn't contact anyone with a request to hold/reopen the flight to accommodate 26 mis-connecting passengers.