What I don't understand about this "farmers" is: how can they pass validation as farmers but not on their own.
Anyways, if they are different individuals, I don't see anything wrong. If the farm owner managed to convince 500 people to work for him, or to give him a cut from the rewards, I see nothing wrong. Good for him, smart guy.
What I don't like is that the farm owner can dump the coins more easily than 500 unique wallets, but same is his decision to keep the coins or to dump them on the market, even though I don't like it.
I don't quite trust that it was 1 person 1 node. If you are running 700 node farm, you are smart enough to organize it and makes it easier for average person to participate (you did more than team) ... you can make things much easier in may ways to maximalize node/person ratio.
1- you know like 20% of flips (your farm made them) - you don't need to solve them, no need to pass them to your farm. That's why farm care about flip quality. Not because this farm cares about network. It care their flips not to be reported so that they would count.
2- it does not need to be 1 person standing in front of 1 real idena client per 1 node. If he prepared special client for his members his algo can collect all flips in one pool (sort out duplicates - each flip is used like 2.4 times on average) and pass to farm members one by one. Each farm member is not limited to 6 flips. Can go to 20 if have enough of time, it can stay at 1 if that's maximum of "slave" capabilities. Each flip solved goes to pool as solved and is send to each node that has it.
That puts us to situation in which 1 person can validate 10+ nodes because its much easier as farm member.