The Iberia piece was really really clear about allowing non-flown segments to qualify for a bonus. I was amazed how explicit they were on this point. The "negative balance" comment was only if you transfer them out to BAEC and the deadline expires without the Avios being spent. There are some interesting IT issues here about distinguishing the "leprechaun gold" avios from anything else in the account on an IT basis, but I guess the idea is that any spend between the issue and the December 1st deadline comes from the bonus amount if there's any balance.
I'm sure there's more to come on this promo - Monday will be interesting as it's the first opportunity after the weekend to take a temperature reading of the state of the IB perspective on all of this. I'm sure we'll hear more next week.
Perversely, the promo might actually open up more last minute availability. In terms of the cost to IB, flights will be the least expensive option to offer. There is usually spare capacity on flights, and filling otherwise empty seats costs IB less than paying a third party for a hotel room for someone taking that route to spend the Avios. I wouldn't expect them to welch on the deal, that would be very difficult, but as I've said, I wouldn't be comfortable if I hadn't followed strict T&Cs.