I too am in the printing business... if you don't actually look at the proof, and you sign off that you did, well, that's your mistake. THAT'S THE PURPOSE OF THE PROOF. To have another set of eyes look for things like that. Otherwise, why even send a proof? You're not gonna look at it or accept any responsibility, why am I wasting the time and effort? Half off is a generous reprint.
We generally don't reprint free, but it really depends on the piece, AND the initial attitude of the customer... if they come back and say, "I know I signed off on the proof, but I missed this mistake, is there anything we can do?" We are much more likely to do a freebie than if they come back saying we mucked it up and it's all our fault. That almost guarantees that we will pull out that signed sheet that clearly states the customers responsibility.
That being said, wedding photography is a sensitive business. Yes, your friend has every right to stick to his policy and not give them a freebie. However, that's probably going to be more hurtful to his business. I'd probably do the reprint, but they'd defnitely sign off on another proof. (And I would offer the messed up album at half off as suggested above. If they don't buy it, they absolutely DO NOT get to keep it.)
Knowledge, Talent, Experience, Success. None of these excuse arrogance.