What is not possible is sth. like that.
SEA-NRT-PVG (all on NH)
and then PVG-NRT-SIN (all on NH)
Not allowed, because you arrive from Japan to China and depart back to Japan from China.
What is very problematic is sth. like that:
SFO-PVG (all on UA)
PVG-NRT-SEA (all on NH with an online connection at NRT)
It's problematic is that NRT is not really the destination, the passenger wants to get to by transferring through China.
If you depart from an EU airport and you are denied boarding (for a clear TWOV visa case), you can pocket EUR 600 in EC261/2004 compensation.