The edges were very clean - in fact, they looked more "cut" than "burst." ..
May I ask how many hoses you've inspected?
Was the inflator connector still connected or was the hose completely severed? You know that the hoses come on a huge roll and are cut before the various connections are crimped on. IF a crimp fails, and they will, then a "cut" piece of hose could very eaisly be visible.
later, we noticed that our DM had been wearing his dive knife on his BC on his upper left chest RIGHT NEXT to his inflator hose.
Sounds like a good place to me. I've carried one there for years.
It could be possible for the knife to have sliced enough of the outer shell of the inflator hose and caused a failure.
big ego...dumb mistake...happy ending...
Maybe, one day he'll have as much experience as you wond won't make the dumb mistake twice.
Unless you can PROVE different you should take his word for what happened.