But in this case, they specifically said that the researchers were unable to escalate. How does he know? Either the researchers violated the rules by trying and failing, or they didn't try and he's simply lying to make himself look better. By your reasoning and their policy, those are the only two possibilities.

What are we supposed to conclude from this? Under the current rules and assuming the description of what happened is accurate, it would seem you'll potentially be punished for establishing the full extent of a breach, unless it's not so bad, in which case you're rewarded for failing. In addition to being illogical and unfair, it also incentivizes OpSec to delude themselves and everyone else about their true security risks.