Lookup r/churning.
https://www.latimes.com/archives/la-xpm-2009-dec-11-la-fi-br...
Plus, depositing several hundred thousands of dollars of cash with the bank would have triggered all sorts of mandatory reporting of the kind that usually ends up with the DEA getting involved. Kind of weird that nobody mentioned having to deal with a absolute shit ton of extra paperwork to make this "hack" viable.
But the little guy not getting away with the exploit doesn't make for a great story. It's like the infamous Hot Coffee story; people only share part of the story because they want to believe it but reality paints a very different picture. (In the Hot Coffee case, it's generally described as a the reason that tort reform is needed, but the reality is that the plaintiff suffered 3rd degree burns and only asked for $20k to cover her medical damages; McDs was the one that fought back and their own lawyers were responsible for accidentally proving that her damages were significantly higher than the amount she had asked for.)
"In the future, credit card purchases will be recorded as cash advances rather than credit card purchases."
This implies there was some period of time where those purchases weren't considered cash advances.
And given that we never heard about any of these jokers having to file reams of paperwork to get away with this hack or having long discussions with the DEA about money laundering, it's clear that the banks just treated these as cash advances like they clearly were.