Think again. One example. Someone is on track to HON, and is somewhat price-sensitive. Now he needs to fly from FRA to IAD. He can either fly UA or LH. He decides for LH because he gets HON miles. However, one year ago, he may have decided that he wants to fly UA because it is cheaper and he would have also got HON miles. Another example. Someone needs to fly LAX-NRT. He can choose UA or ANA - he might choose UA because of HON miles. See why UA would have an incentive to pay LH to hand out HON miles on UA flights? They probably balanced the costs (handing out HON miles for every M&M member flying UA) and the benefits (people choosing UA because they get HON miles). They decided against HON miles.

I don't know whether this is what happened, but it certainly makes sense.

SmilingBoy.

Edit: Just saw totti already made the point. I started answering a few hours ago, and just now came back from a meeting.