Notwithstanding that any first-year law student could recognize that there is no contract formed by booking a zero dollar reservation, a private business can refuse service to anyone as long as the refusal is not predicated on a protected (i.e., race, etc.) ground. The remedy? Mr. 300 rooms can have his money ($0) back!
IMHO, Mr.300 rooms was the inevitable result of "the list" mentality. Taking advantage of an obvious error is one thing; crying foul when the error is reasonably corrected is another. Hilton should make a note of all the whiners and make sure they get the "special" rooms (you know, the ones nobody wants b/c noise, smell, location, etc.) the next time they book a stay at a property.
One interesting coda: I just received some paid airline tickets from my travel agency. In the fine print on the back of their receipt is this language: "Unless the term "guaranteed" is specifically stated in writing on your ticket, invoice, or reservation itinerary, we do not guarantee any of such suppliers' rates, bookings or reservations."
Of course, I have never seen the word "guaranteed" on any ticket, invoice or reservation, regardless of the source...