You are correct in your analysis, except regarding "duplicate content". If I had implemented this mod without any thought towards avoiding duplicate content, then I would agree with you that this would definitely lead to duplicate content.
As it stands, the mod smartly displays only urls that a search engine should see (to the search engine). additionally, if a search engine happened to find this url:
http://www.miniature-giant.com/mark-iv-specter-Reaper-sku-7001-Combat-Assault-Vehicle-CAV-c-249-p-1-pr-1240.html
then XC SEO would redirect the search engine to:
http://www.miniature-giant.com/mark-iv-specter-Reaper-sku-7001-Combat-Assault-Vehicle-CAV-pr-1240.html
What I normally do to test, is go into bots.php, at the bottom, the variables that are being set regarding bots? set them all to true or Y or whatever the appropriate values would be (you'll have to look at the code). This will make everyone evaluate as a bot (so hopefully your website isn't live yet). Then you can go through your site and see how you (as a bot) are treated by XC SEO.
If you still find discrepancies, please let me know