You've described scenario for us very well. There is increased emphasis on good assessment practice in FE (and across the board in Education), the Pearson BTEC qualifications being a case in point. This is leading to our moodle assessment tools being under the same level of scrutiny, and this type of things, where a user can accidentally do something irreversible, that as Ruth put it brings "confusion for both teachers and students" is no longer an acceptable 'quirk of Moodle' but something that could lead to teachers and College managers loosing faith in the system... which is a shame.
Are there any Moodle devs out there who can pick up the mantle of this challenge and take a look at how much work would be involved in putting an "undo Allow another attempt" function.
We'd love to do it if we couldn't... but have no time ;(