IMO it is nothing more than a way to be different and establish a new way to judge player vs player skill. I think it's garbage in a double elimination style tournament to be honest and I had this conversation with several TOs from different tournaments, all of which agreed it's garbage. There should first, be more focus on preventing Double Jeopardies before the bottle neck, ie: 4th through 1st place, which at times, absolutely cannot be avoided since there is no other player in that bracket to play against. However, this still manages to not happen that often in tournaments I've experienced depending on the program, or if you use paper brackets.
I had it happen twice in one bracket for me in Challonge once and I corrected it manually, but in 10 years I've never experienced expanding a previous set with a player at a DEFICIT other than grand finals, as this is the purpose of a double dip grand finals where the winner of the losers bracket must beat the undefeated player twice, since they merely need to LOSE twice to be eliminated. Typically, if you lose 2 matches in a tournament, you go to losers, and then losers finals, IMO, is the soonest time for two players to re-meet in a tournament, that means BOTH players have lost twice, and they get 3 more losses a piece, again typically based on 2/3, 3/5 increments.
It's really not about beating individual players when it comes to stats relative to tournaments, it's about being better than everyone on that day, collectively. This means if a certain player cannot beat another, they might not have to face that player at all in the tournament depending on other participants who might be able to beat that player. This can also happen in tournaments with a continuation rule, or any tournament for that matter. The individualism is for post tournament chit chat, theory, and what not. If you want to know how every player stacks up to every player, you do a full Round Robin and play over the course of a week...
Of course players need to worry about specific opponents and do their homework for their own benefit if they want to win, but again, IMHO, you shouldn't be eliminated from an entire tournament by one player unless there are no other opponents left that far into losers. You should never have to lose to the same player twice in the tournament unless it's for a single digit placement, which we saw tonight and that was fine, but I didn't catch the whole bracket. Did any other continuation rule match ups happen in the semis, quarter finals, etc?
There are other concepts that players dispute, like, seeding, skill placement and what not, which is done as a courtesy to prevent high level players from being eliminated "early." IMO, there is a very high chance random seeding would still result in the same winner in any given tournament but the landscape can look chaotic. For example, based on a 32 player bracket, a relatively average player could theoretically make it to winners finals if every player of skill 1 - 16 out of 32 possible points were seeded on one side of the bracket.