If you do accounting outside of the blockchain, you can "counterfeit" bitcoins sort of like fractional reserve banking. But, if you perform a transaction through a bitcoin client and have it record on the blockchain, then is it really possible for pirate to do what you suggested?
Yes, absolutely. Pirate accounts were always outside the blockchain. PPTs were always outside the blockchain.
If I deposited 100 BTC with Pirate or used it to buy a PPT, that 100 BTC is still in circulation in the blockchain. In addition, there a 100 BTC Pirate debt and, if it was a PPT, a 100 BTC PPT obgliation. So if you use 100 BTC to buy a PPT, it becomes 300 BTC. (Assuming the PPT operator is honest, 100 BTC of that doesn't really count.)
Pirate asked the PPT operators for their books so he could pay people directly (I think.) So the PPT obligations could now be removed, and 100BTC to buy a PPT is now 200BTC (instead of the 300BTC.) Would this be to pirates advantage?