Suggestions for GM Error

There's a (non-Cat23) judge game in which the following happened.

There are seven people playing that all know each other outside the game,
and a newbie GM.  A number of players have requested deadlines, and this
has been frustrating various people in the game.

So in a Fall turn, England requested a deadline extension at the last
minute, and was given a one-day extension.  He then submitted orders
without setting wait, but three other powers (IGT) all had the wait flag
set.

The next morning, a number of players complained vocally about the delay,
and so the GM noticed that all orders were in and rather than waiting
until the deadline, force-processed the game.  Unfortunately, Italy had
apparently been in the midst of changing his orders, was shocked by the
processing, and submitted orders that he claims were not his intent.
These orders did actually result in a two-center stab for the Italian
(successful), but Italy still insisted that he had not actually wanted to
make the stab.

The GM then decided without really consulting anybody to rollback the
turn, which now leads to the usual godawful mess that happens when you
rollback a turn.

What is the best thing to do in this case in order to be maximally fair to
all players?  The game had been essentially a six-power stalemate and four
different powers chose to stab during this turn, so a rollback causes
quite a number of problems.  On the other hand, it was also unfair to
Italy that he was forced to submit the wrong orders because the GM
preprocessed after extending the deadline.  But we have to deal with the
situation as it is, rather than as it should be, so I'd like to get your
opinion on the right way to proceed from here.

Thanks,

	-Charles (who is neither a player nor the GM, and might I add is
not the GM, but an interested observer that knows all parties involved)