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Next time you're at one of these games, you should emphatically suggest that someone volunteer to be the permanent dealer for every hand. Even if that person is an active player in the game, shit will just be ALOT easier if you pick the fastest guy, and let him deal every single time.
The right thing for the "manager" to do here would be to keep the guy's hand live. That has very little to do with poker rules, and more about what's operationally practical for running a poker game of this nature.
If you're going to be a rules sticker over what's mucked and not mucked, then you can't be letting the common-folk deal. If you're gonna run your game like this, then you need to allow some wiggle room. If it was obvious, or even semi-obvious to everyone at the table that the top two cards belonged to the dealer, then there really shouldn't be a problem. You just accept that funky shit is gonna happen when 10 different people touch the deck, and move on.
It would have been a bad decision for the floor manager to muck the guy's hand and basically bust him out of the tournament.
Yet somehow, unbelievably, the manager made an even worse decision. Leaving it up to the UTG player was horri-bad. You basically told the guy, that the cards don't matter. With a single word here, you can choose between folding away 600, or busting a player and taking all of his money without a showdown. Why have a floor manager in the first place if this is what's going to happen?
It's mind-blowing that the UTG player chose to lose money instead of bust a player. But I'm sure peer pressure was heavily in effect.
And as a general overall note, I'd say that your concern over what the "right thing to do" here does not compute with your presence in this game in the first place. If it's important to you that the game be run professionally, then this is probably not the place to be spending your time.
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