The average desk agent could care less what kind of discount you're using and I highly doubt that played into this situation at all.

More than likely the property was experiencing some type of inventory imbalance. Hilton does have a help desk that they farmed out to Accenture for OnQ/IT related matters but they are not the most timely in handling things.

FWIW, as an desk agent you are not trained on how to close off the inventory especially if this took place at a limited service brand.
In that format you would attempt to call the sales manager or GM at home and hope that they answer their phone. If they don't, not uncommon, you're screwed in solving the problem correctly.

The easiest way for a desk agent to solve the problem is not to go around cancelling reservations, but to make as many fake reservations as they need to until OnQ won't sell anymore rooms. Fast, easy and foolproof.