Well it has been raining here all day so I did this to keep myself entertained. I recently repaired my 455 hydro and have reread the TM again.
The THRV only protects the FORWARD side of the hydro. It does not protect the Reverse direction. The THRV is installed in the forward closed loop from the hydraulic pump to the hydraulic drive motor. I guess that is why it did not protect the rest of the hydro. Since there were damaged loader cylinders, the IRV did not protect that loop.
My SWAG (Scientific Wild *** Guess) is that the guy picked up an excessive load in the bucket. He lifted it too high and suddenly dropped the bucket. The return fluid to the hydro is SUPPOSED to be "pressure free oil" per the tech manual. By dropping the loader bucket, you create a two cylinder one stroke pump. The return oil is now a high volume high pressure oil flow into the hydro. Apparently, it was high enough to damage something in the hydro. I always wondered why the return lines for some loaders had an in line restrictor on the return side. Now I think I know why.
Why did the loader cylinders fail? I could not find the specs for the cylinders, but the rockshaft cylinder is rated a 2000 psi. Let's just assume the loader cylinders have the same pressure rating. Dropping the loader bucket released the pressure in the cylinders, until the operator returned the SCV to neutral. The operator closed off any path for the oil in the cylinders to go. This happened just before the bucket hit the ground causing the remaining fluid in the cylinders to be pressurized by the falling weight in the bucket to a lot more that normal. This pressure is what damaged the cylinders. The IRV is out of the loop when the SCV is in the neutral position. So, it could not protect the cylinders. I believe you could do similar damage at 1000 psi with the right conditions.
Having said all of that, I cannot blame the shimmed IRV as the reason for the loader failure. Many owners have did this and I have not heard of this type of failure before. I expected it, but I am surprised it is not more common. Was it the cylinders or hydraulic hoses/lines? If the loader cylinders and hoses are rated for 2000 psi, the IRV being increased to 1250 psi should not be a problem. However, higher pressure may cause problems with the charge pump and other functions inside the hydro such as the lube oil and PTO. John Deere would definitely have the right to void the warranty on the hydro.
You ALWAYS want to carry the load in the bucket as low as possible or this could happen to you.
Hills and loaders usually do not mix well.
BTDT and have brown briefs to prove it.
Since this owner had a similar problem with a Kubota, I would say the failure was due to the operator not the equipment.
But that is just my opinion,