I think the reason we have so much disagreement on whether the dog in question should/would be dropped is because we may all be imagining different things when we read the description written by the OP. Hopefully if we all saw it there would be much more agreement.
I am not a judge so I'll just say as a HT handler in either AKC or HRC I would expect my dog to be dropped. It would not matter to me what the judges justification was. I agree it was not a "Break." Dropping the dog could easily come under the trainability heading. If the dog wanders away when he is supposed to be sitting he is out of control.
I disagree with Gooser on the laying down issue. I often tell my dog to lay down on honor. He can always see the marks and he is always attentive to the action. I started doing this when my old dog once sat on the honor for a long, long time while waiting on a re-bird or the handling of some mechanical issue. It was an insanely long time but I was afraid if I left the area of the line and then returned he might really think he was about to retrieve again (like a new series). He eventually decided nothing was happening and laid down. After that I used it as a way to communicate to him that his job was done. Further I reasoned that it takes a little more effort to break from a down position than from a sitting one.
As for the RESPECT factor, I completely agree that the handler/dog duo on honor should be respectful of the working dog. They should be still and quiet and present no distractions, but the main respect I'm looking for on honor (or any other situation) is for my dog to respect ME and if I told him to lay down then compliance equals respect to me and could in no way interfere with the working dog.