The real question is, how do you prove that their bitcoins were in fact lost?

How do they prove beyond all contestation that they haven't lied about it and still secretly control the wallet addresses the allegedly "lost" bitcoins are stored in?

After all, the best of people will lie, cheat, and steal every moment of every day if they can gain from it.

That said, in the short term any "lost" bitcoins will simply make the rest of the bitcoins in circulation more valuable, and in the long term the precision can be lengthened to add more spendable units to the current supply.

21 million bitcoins equals 2,100,000,000,000,000 (21 quadrillion) spendable units of value.

Increasing the amount that can be mined higher than 21 quadrillion units of value should never be necessary, unless it's better than changing the precision... and even that should never be needed, but it's possible.