From the sound of it, they went too far. Airlines hate the idea of something conferring rights or guarantees (unless they're on the receiving end). CO should do the honorable thing and give compensation on at least a denied-boarding level. What I fear they might do is have lawyers write even more CYA language into the carriage contract or wherever to try to provide cover for cases like this ("We can do anything we want and your flying us constitutes acceptance of that.")