Interesting point. So the 2-3 digit bib numbers are comp entries given by the race management to "elites" and friends/family/local club runners etc. I know they are not just elites because I know a couple of the runners, one with a 2 and one with a 3 digit number. Both are mid pack hobby joggers heavily involved in a local running group and were comped.
Thus, race management was aware that Damon was entering and gave him a low bib number and comp under a false name. Given that it is a violation of their own policies to run under any name other than your own (either by bib transfer or by name falsification), the fact that race management not only was aware of it but actually assisted in the violation has some interesting legal implications. If anyone were disqualified for bib transfer or running under a false name, they would have a pretty strong legal argument that the race management set the precedent that it is permissible due to their aiding in Damon's false name entry.