Whose side are you on?
I'm totally on the side of the student. Also, I feel like this type of grading philosophy is more geared towards helping those who legitimately want to (and CAN) bump their grade up a level. If a student is already an A student, as this one is, then if they want to intentionally ditch the last project so they can put more time into studying for the final (or not), so be it.
If I was the teacher, and I knew the situation that if the student busted butt to get a 100% despite it NOT making a difference in their final letter grade because they already had the A, I wouldn't even make them turn anything in.
What the teacher did was just give the student mindless busy work.