You are correct; it is not covered specifically in the ToS. It is however covered under "GM Policies". (As PlanckZero stated.) I'm sure if you had reported to a GM that "Hey, we just split our group up and got 2 of the same drop in the loot pool! Is that ok?†the response would have been "<GM Dave> Thanks, I'll be taking that."
The issue here isn't about the glitch itself, it's the fact that those that used/abused said glitch are attempting to justify to the masses that it was ok to do so. You were breaking FFXI Rules and Policies and are unwilling to admit to it. Again, it is this sense of entitlement of the select few by stating "I did <insertevent> 100 times a week for 3 years with nothing to show for it, I'm getting mine now 'cause we found this glitch". You are entitled to ****. The <insertitem> did not drop so move along. Get over yourself that you deserved said <insertitem> for whatever reason because of your perceived status.
You'd think that all the people that benefited from this would be saying "Oh well, at least we got some items." No, they are **************** about how SE screwed them and they'll never get anything now.(Again that entitlement issue.) Last I checked the glitch only increased the quantity of each drop in the treasure pool. It did not affect the drop rate itself.