First off, chuck the cue up correctly. Lathes get too much tool pushout when 3x diameter is out past the jaws. Second I would show the customer both the ferrule and tip and politely grill him as to why they're damaged. Then tell him the only option is the slightly take the ferrule top down to remove the damage. And the same for the tip. Tell him he owes you because there was extra work besides a simple sanding prep. Install tip again. Writing down and saving the picture for future reference when he has it happen again or needs a new tip.
I call bullsh*t on this one. Although it is not recommended to have more than three times the diameter of the material sticking out, that is for tooling the material where pushout is an issue. And even then it is only recommended if you do not plan to turn between centers or use a follower rest. Since the only thing that will be tooled is the face of the ferule which isn't effected by pushout enough to matter, and the leather tip which is to soft to matter compared to the other materials, placing more than three times the diameter is irrelevant.
You should alway have exactly the amount you need to do the job sticking out and nothing more. In this case he has the ferule and about a quarter inch sticking out. This is correct if you plan to clean the ferule (which any cue repair person worth their salt will). I myself clean the ferule and about an eighth inch or so past the ferule into the wood. This would be set up exactly how I would need it to effectively do my job.
If you were never supposed to have more than 3x the diameter sticking out how would you ever work on anything past the 3x mark? Lathes where made to do machine work with tools. Not sand paper. The stuff we do on a regular basis using lathes was never intended. If my shop teacher seen me do a tip he'd have an aneurysm. What do you think would happen when the shop teacher caught you holding a razor blade at both ends and dragging it over your material? Or running your hand up and hitting the jaws of the chuck with the side of your finger as they're moving to sand a ferule?
Although you are somewhat correct in the 3x rule, I believe you are whole heartedly incorrect in this situation.