This goes back to the pre-TEM days of swiss cheese layers.
They punched thru 3 layers of cheese and they just missed the hole in the 4th layer. Good thing the GPWS was there as a 4th layer.
The 5th unintended cheese layer of 7800 feet may have saved them by a few hundred feet, but maybe not at at 6 degrees celsius?
Big fat Awe-Crap on ATC for a LET THE LAWYERS SORT IT OUT clearance. I'm not a controller, so I will defer judgement.
Aw-crap on the crew for taking the ambiguous ATC clearance bait.
Big fat Atta-boy to the crew for following the GPWS. Many FOQUA events reflect crews disregarding GPWS or being dangerously slow to react.