But shouldn't the 72 hr rule be moot since reservations are only held for 24 hrs before being cancelled? And why is this problem unique to CO? I remember several years ago seeing verbage in TW's FF program stating that they would cancel membership of anyone discovered to be gaming the system by making such fake reservations.

It seems like these policies are governed more by paranoia than sense. It's like the PC requiring ID along with your card for fear that some kid tries to use his Dad's card during a trip. Yeah, maybe they are stopping a few cheaters, but it's not like this was ever a big problem in the first place. If this really were a problem, then they would need to extend the policy to all domestic flights as well.