I actually think it's possible that United is telling a highly misleading version of a half-truth.
Sheila Jackson Lee may have called up some high powered contact at United to get her on first class no matter what it took. That contact probably knew how to manipulate something in the system to make it look like that woman had an accidental cancellation, thus making the seat available.
They were probably hoping the woman would show up and hear the "oops, something went wrong, probably you accidentally did it in your app" excuse, accept the $300 voucher, and not make a huge stink over it.
There's lots of ways to manipulate those airline systems by employees with access to do so. I know this because I've asked for them to do certain things before, was told it was "impossible" given the way their system worked, and then somehow after a lot of debating/arguing, they put me on hold and magically are able to get it done through a back office. Like they give me some long, detailed story about why my request absolutely cannot be done (which is probably true at their level of access), and then somehow they end up doing exactly that via someone higher up.
So it probably was coded internally with some bullshit that the customer canceled.
I actually believe that this is probably the way they've been doing this when the Queen wants her first class seat, and needs a commoner downgraded.
I'm also guessing that perhaps some of the staff at the airport knew what was going on (or suspected it), which is why they panicked when this woman was taking pics for social media. They knew what might be coming.