I think a lot of the comments in this thread are making assumptions about what the students did or didn't do, and might possibly be excusing some unethical behavior because of faulty assumptions.
Right after that, he said that he couldn't be sure everyone on the list had cheated. He is saying that he thinks every cheater is on the list, but not everyone on the list is a cheater.
I would love to hear some statistics folks weigh in on this. Or: speculation ftw!
At its worst, universities will sometimes assume a student accused of wrongdoing is lying, and punish the student based solely on the word of the faculty/staff bringing the charge. This happens in lesser cases where the administration thinks it can get away with it, and when the student is frightened of harsher sanctions that might be inflicted if the student asserts his or her rights and demands a full hearing process.
At its best (typically in more serious cases), the disciplinary process resembles a civil case (except instead of a jury, it's more of a tribunal) where the required proof is a preponderance of the evidence.
It's no wonder 200 students confessed. If I was in that class and I'd never seen the test bank, I'd have confessed too. It's been my observation that the disciplinary process is better at railroading not-provably-guilty students than punishing provably-guilty students. I would not want to take my chances.
At a smaller but growing scale, over several semesters, this tactic of using the test bank might not lead to any striking anomalies in the distribution... just a gradual rise in the average, and fattening of the above-the-median tail. For a while, that might convince the professor he's doing better!
(Also, while we see Summer scores for comparison, he doesn't show the prior Spring or Fall. Often Summer students are a different pool, who in this case may not have been privy to the same campus folklore. Perhaps there was evidence of the same tactic earlier, or another professor with a different exam style taught previously.)
Lots of speculation, I know, and I would need more information to assign levels of culpability overall. Were students specifically warned off using test bank questions? Did those who obtained the questions lie to the publisher to acquire them? How similar were the circulated test bank questions to other official preparation materials? Etc.
It could also be interesting to see, on the makeup exam with presumably all-new but similarly-difficult questions, has the average mastery gone up? Perhaps memorizing the test bank questions does have some persistent beneficial effect for understanding the material.