The way I see it there is a pretty clear consensus here.
Firstly, 1 ) Rule was broken. It's clear that a slot is always counted in the rules.
2) In this case, invalidating the sub has a lot of disadvantages and extra work that are undesirable (if the tournament had not started, it would have been an easy fix in compered to now).
By far the easiest and simplest solution is to let the sub count and move on. However, giving MH a special one-time exemption is clearly unfair. Therefore, as pointed out by several commentators above, it is perhaps best to separate between slots and subs. In other words, if a player has played 0 games in a tournament prior to being subbed out, that player has not used a slot for that tournament.
Technically, the relevant part of the substitution rule for CL 11 (all divisions) will change from this :
Old Rule
In the event of a substitution, the on-going games for the retired player will not be remade. Only games which have not been created will be allotted to the substitute. Both players will use up a slot playing this tournament. A substitution can be carried out by the CL staff. We will guarantee the substitution within a maximum of 3 days. Any new games created within this 3 day period for the retired player may be forfeit as well.
To this :
New Rule
In the event of a substitution, the on-going games for the retired player will not be remade. Only games which have not been created will be allotted to the substitute. Both players will use up a slot once the tournament has more than one game created. A substitution can be carried out by the CL staff. We will guarantee the substitution within a maximum of 3 days. Any new games created within this 3 day period for the retired player may be forfeit as well.
PS. Thanks for everyone's comments. Also, I did ask both Audit and Ethics to provide their opinions here since there is an obvious connection between me and MH. With the posts that have been made, it seems clear to me that this change is the appropriate step forward.
Edited 2/13/2019 21:58:59