Sounds like the customer service end of the business didn't talk to the technical side. Since there wasn't a push button functionality for account recovery (and it had probably never even been done before in a quick-and-dirty fashion either) to them it was gone permanently. The photos probably would never have been recovered had this issue not gotten so much attention though. This probably forced the two sides to talk (either an exec said, "Fix this" or someone on the tech side saw the publicity and said, "Wait a minute. It's still recoverable. WTF was that rep talking about?").
It could be that the rep was scared to let anyone to know he messed up, so he didn't escalate the issue. Costumer should have asked to be connected with supervisor.