I was under the understanding that once a player tosses their cards to the dealer face down and the cards "touch" the muck pile they are "dead".

Sounds like room manager eventually ruled the hand was dead.

What's your opinion of what should have happened?

Sounds like player #10 NEVER showed the hand, the hand was discarded into the muck and the cards hit the muck pile. The cards should be dead and it is his own fault for discarding the hand and not showing them face up. Once the rules starts to get bent, then that's when the real problems occurs...