Humans are allowed to look up and learn from as many previous problems as they want before the competition. The AI is also trained on many previous problems before the competition. What's the difference?
Also, who cares? It's a self contained non-human system that could solve an ICPC problem it hasn't seen before on its own, which hasn't been achieved before.
If there was a savant human contestant with photographic memory who could remember every previous ICPC problem verbatim and can think really fast you wouldn't say they're cheating, just that they're really smart. Same here.
If there was a man behind the curtain that was somehow making this not an AI achievement then you would have a point, but there isn't.
Small model solves an easy problem; big model solves a challenging problem. I wouldn't call those problems; they are more like invented puzzles. Perfect match for the AI marketing department to "solve".
The marketing speak of some companies goes into effectively fantastical territory. Some claims that are made effectively imply P = NP, which is like bad TV-series-level science fiction, but some people fall for it.