I'm not going to comment on who was wrong or right, since I don't know all the details of this situation. What I will say is that in a very diverse community like this knife passaround when something valuable is changing hands, rules are extremely important. These rules are only as strong as someone is willing to enforce them. (Yes, the rules serve us, and we shouldn't get to the point of us serving them . . . that's where judgment comes in, and I'm not going there in this post.) Personally, I place a very high value on rule enforcement.
Being put in a position of authority and/or facilitation for an activity like this takes effort, guts, focus, discipline, and personal time. DaveH -- thanks for freely giving all of these things to the group!