In this case, it doesn't sound like they're reverting it because of overall breakage, but rather because it breaks the tool that would otherwise be used to control TLS 1.3 trials and other configuration. Firefox had a similar issue, where they temporarily used more conservative settings for their updater than for the browser itself, to ensure that people could always obtain updates that might improve the situation.
It sounds like a perfectly reasonable behaviour if the goal is to "fail closed", to provide more security in a fashion similar to a whitelist.
If it sees that it's TLS, it should attempt a protocol downgrade.
I don't remember the exact details but I recall reading that TLS has a mechanism to prevent version downgrades, precisely to defend against such "attacks", so the connection would not succeed in that case either.
This isn't "failing closed", and this isn't a whitelist. TLS allows you to whitelist to certain versions of the protocol during the initial negotiation at the start of the protocol; that is the opportunity for either end to state what version of the protocol they'd like. It is not permissible in the protocol to close the connection as Blue Coat is doing.
This isn't a downgrade attack, either: both server and client are free to choose their protocol version at the beginning. The client & server will later verify that the actual protocol in use is the one they intended; this is what prevents downgrades.