In a perfect world, I think you're right - but 'rules is rules', I guess! At least we will get a refund of the original fee, for the incorrect application, at some point... Anyway, it's all behind us now and next step - British Citizenship and a passport. Hopefully, then we can think about a 'proper' holiday.
These days a lot of these things are managed/governed by inflexible "Enterprise Management Systems" ... consequently even if they know what the problem is etc. they have to get you the user to go back and tick the right box / use the correct form and re-submit before they can tick their box and approve it etc etc.