I think there's an argument to be made that the canary continuing to live is not sufficient to establish trust, for the reason you outlined. However, given that it is in fact dead, this is sufficient to revoke trust-- as you also pointed out, none of the scenarios are good for them.

As for why they would kill the canary and then backtrack, I think a plausible story could be that the canary was killed by an engineer, and then the backtracking happened by management because they don't want to own the consequences. This could explain why there was a delay between removing the canary and putting out a cover story.

Collectively as an organization, they're either acting in bad faith for whatever reason, or else they're incompetent.