I have problems with both Hero and Villain, though Hero's offence is far more serious assuming I properly understood the situation.
As I read the original post, Hero is host and decides to rebuy for himself way more than the stated buy-in limits. Unannounced. This is not angle shooting, it is outright cheating in my book. If Hero doesn't care for his own house rules, he should change them publicly and before the game starts.
Villain's actions are dubious. There is every chance that villain is playing "heads I win $200, tails I pay off $75". But hero's cheating opened the door for this play. Hero can't have more than $75 per the house rules. What is Villain to make of all those chips in front of Hero? Is the hero/host in the middle of selling more chips? Has someone cashed out and the host hasn't racked up those chips? Is Hero in the middle of some chip bank clean up? < I am aware that villain isn't likely to be so clueless. >
If I am sitting at the table, I think the resolution is "reasonable". The host was breaking the rules, got caught, and had to take back the illegal part of his buy-in. I am not saying Hero's action at the time of the buy-in was reasonable. But I could give him a sliver of doubt about the acceptability of the situation.
Hosts need to be dedicated to defending their house rules. Changes in the stakes of the game, buy-in rules, cash out rules, betting formats or betting limits shouldn't change in the middle of the game.
A Host also needs to be crystal clear in cases where banking responsibilities might clash with Hero's interests. Rebuys need to be clearly announced, prior to the start of the hand. Chips coming in / going out while hands are in progress are loose cannons - There shouldn't be any question about what chips are in Hero's stack vs. chips in transit to/from the bank.
If Host wants to play "match 1/2 the big stack after ten o'clock" but plays $25 - $75 before ten o'clock", then say so when setting up the game.
Don't rebuy in stealth mode for your own account.
Don't assume everyone knows these secret rules. Don't assume everyone agrees with them either even if they don't speak up.
Changing the buy-in rules mid game harms the weakest players and benefits the better players.
Hero has no one to blame besides himself. Villain was probably taking advantage of hero's indiscretion but there is only one person responsible for the situation.
My $0.02 -=- DrStrange