The standard line is: If the rate went up 40% (or even 40 cents), you're not going to call to ask for the higher rate. It's a big difference, and we don't know if the prepaid rate was booked months ago for travel several months in advance, or if the trip was booked yesterday for this coming weekend.
There's always the chance the rate may fall. And considering the difference between a nonrefundable rate and a cancellable rate is generally just a few dollars, I never really found it worth the risk. On a flight, the difference is generally several hundred dollars, so there's more of a reason to consider the non-refundable rate.
If I was the hotel, I would respond on TA stating exactly what you said: The traveler agreed to the terms and conditions. They wouldn't want to risk getting a whole bunch of people writing in saying that their rate fell so they should get a refund or credit for the difference also. Or I wouldn't respond at all, to limit any possible flare-up.