A former air accident investigator who works as an aviation safety consultant said "It's extraordinary that Boeing concluded that a failure of this part would not have safety consequences," and said the report was "disturbing"

Doesn't seem like gray to me. It seems a company who has a history of cutting corners and ignoring or downplaying safety problems did exactly that in this case too which resulted in the deaths of many people. UPS made an error here as well in trusting Boeing when they said it wasn't a safety issue and they should have installed the revised bearing assembly out of an abundance of caution, but I don't know much they would have known back in 2011 about the changes at Boeing that prioritized profit over safety following the merger with McDonnell Douglas

I am wondering what the exact fail mode here is.

Because my naive conclusion after looking at the part in question is exactly the same "would not result in a safety of flight condition." if the bearing cracked at the point in question it is going nowhere, the bearing is still captive in its housing. hell it looks like it could have been designed as two pieces and it would work the same. the large bolt is what is holding the engine on.

The best I can come up with is that a split bearing causes increased wear on the mounting bracket and nobody noticed for a long time.

Anyhow, here is the ntsb update in question https://www.ntsb.gov/investigations/Documents/DCA26MA024%20I...

The FAA has not determined that this flaw did lead to a safety of flight condition. Investigation is still ongoing.

What's gray? To me it looks like written proof of incompetence.

Apparently they expected it to blow up on the ground, so technically the plane wasn't flying yet ...

Yeah saved boeing losing face and sales by requiring all the planes be grounded and fixed. Just eye it up every 5 years, if you want to.