No, you were perfectly clear, and I agree with your concern. I would expect that the pad wear sensor should have triggered.
As for "I asked the svc advisor if he's ever heard of this happening and to my surprise, he said no.", I just dropped mine at the dealership this morning to have the "shuddering transmission" checked out, and I told him that the forum is overflowing with horror stories about valve bodies being on backorder and trucks being in the shop for months. The service advisor said that the 1500 have not been an issue and that he had personally only seen two 1500s but over ten HDs (non-Allison Allisons). I call BS on these dealerships.