The ref decided not to DQ him so the rules were followed. I certainly wouldn't have blamed the ref if he had DQd Nick. That's completely different to making up rules on the fly though.
Really? How so?
Taking shots after the round is a DQing offence, not DQing him was an "on the fly" decision -- twice.
And while the normal rules is "1 lb allowance" for regular fights and "no allowance" for championship fights, there are exceptions to that rule:
In non-championship fights, there shall be allowed a 1 pound weigh allowance. In championship fights, the participants must weigh no more than that permitted for the relevant weight division.
The Commission may also approve catch weight bouts, subject to their review and discretion. For example, the Commission may still decide to allow the contest the maximum weight allowed is 177 pounds if it feels that the contest would still be fair, safe and competitive.
In addition, if one athlete weighs 264 pounds while the opponent weighs 267 pounds, the Commission may still decide to allow the contest if it determines that the contest would still be fair, safe and competitive in spite of the fact that the two contestants technically weighed in differing weight classes.
So the rules were followed here as well (assuming GSP and/or Diaz were actually over the 170lb mark, which has yet to be shown, unlike the cheap shots, which there is no question about.)
Rules that Diaz got away with and no one seems to care:
Using abusive language in fenced ring/fighting area
Attacking an opponent on or during the break
Attacking an opponent after the bell has sounded the end of the round
But let GSP "abuse" a rule that is actually more to the benefit of Diaz than GSP (if it was violated by only GSP or at all) and guess who gets flack?