I'm not sure I agree with "Deploying in such a way that all your servers are not running the same codebase is obviously bad." I have a lot of experience in large scale systems (although this incident with 8 machines does not qualify) and I would say there is _always_ a period of transition where versions X and Y are online in production simultaneously. How can it be otherwise? You'd need scheduled downtime to do it any other way.
I think the main problem here is nobody at this company pushed back on this stupid development plan of reusing a flag for a different purpose. There's no excuse for that (or maybe there is, they had run out of fields in some fixed-width message format or something dumb like that). Also apparently the use of the flag was not tied hermetically to the binary in production; when they rolled back the binary the flag was still there but it meant something different to the old software.
The correct way to roll this type of change out is for the new input (the "flag" in this case) to be totally inert for the old version of the software, and for the new version to have a config file or command line argument that disables it. So _first_ you start sending this new feature in the input, which is meaningless and ignored by the existing software, and then you roll out the new software to maybe 1% of your fleet, and see if it works. Then roll it out to maybe 10% and leave it that way for a week. Insist that your developers have created a a way to cross-check the correctness of the feature in the 10% test fleet (structured logging etc). If it looks good roll it to 100%. You now have three ways to disable it: turn it off in the input stream, turn it off in the new software with the config or argument, or roll back the software.
Doesn't look like these guys really knew what they were doing.