I figure the editor and everyone else involved figured the Paolini name will sell and if it does not they can drop him.

That's probably exactly what happened. Editors, publishers and agents aren't stupid - just very very cynical. Most are perfectly happy to edit and sell books they know full well are irredeemable garbage, just because they're sure it'll make everyone a lot of money. And hey, if you're going to get rich by publishing some moron's lame fanfiction, might as well hold your nose and go ahead.