I'm fairly sure Blizzard didn't warrant any bans for the bug, and just hotfixed it. I highly doubt it was a very big deal to them at all. If they did any action towards the players who used it, it was probably a warning and removal of the gear.
I've talked to him before. There is nothing special here as he used a exploit when Transmogrification first came out. You run a dungeon with someone that has the gear then have them need on it, mog it, then give it back to you. He just knows the guy with the gear, he doesn't actually have it.