The gallery did the right thing. Misappropriation of works as "original" or "one's own" is irritatingly commonplace. The National Association for the Visual Arts (in Australia) carried a piece about this last February I think.
Interesting how this debacle involved both analogue (obtaining negatives) and digital (recombo) works.
I do wonder though about the licensing that Getty implies or grants and whether such provisions were effectively breached as part of the reconstruction of the images. Possibly the same licensing it provisions for images signed up via Flickr.