Honestly, I'm not sure when that precedent was established; my understanding has always been that votes valid at the time they are cast remain valid regardless of any changes to the candidate's status during the election. This was the reason several voters gave for deleting their ballots in the last by-election, for example: otherwise, Enlightened Centrist would have been elected despite being a sock of a banned poster. As for legitimacy —the argument, I suppose, would be that to disqualify votes based on the actions of a candidate would be to effectively disqualify those voters for an offense they had no part in, and declaring the loser elected without a second vote is undemocratic (in that it ignores the will of the majority, who did not want that person elected). The recourse is then to declare the banned poster elected and their seat then immediately vacated, allowing for a second vote.
Ok, but if a voter is found to be a sock, is the sock's vote counted? I didn't think that was the case.