Well, in my opinion it is an error only in that it isn't struck on an Ike planchet. However, it was forced (a.k.a. Mint-assisted). Since it neglects the true spirit of what it means to be a "Mint error" and it wasn't a "mistake," I agree it should not be a "Mint error," but it is still an "error" coin. You can't simply ignore its existence regardless of how it was made at the Mint just like the 1913 Liberty nickel. The term "Mint-assisted Error" reflects it was neither accidental nor authorized. However, many error collectors don't care and whoppers like these will sell at 5-figure prices all the time.
A few questions for those 'in the know'. If the authorities at the mint physically saw the employee produce this 'error' and confiscated this 'error' in question, would the mint employee been allowed to keep their job and continue working there? Been arrested? Terminated with no other repercussion?
Mint employees are not permitted to keep any coin, even if a Mint manager approves of it because they aren't authorized to allow it. They must be turned in and they are destroyed. That is one job of the U.S. Mint Police to ensure these are not being released, which includes monitoring both the employees and even other Mint Police. A few employees have been fired, prosecuted and sentenced for violating that law.
Based on the above facts, the employee being found guilty, and prosecuted would lead me to classify this 'error' coin as 'mint assisted counterfeit coin'. The only mint error that I can determine is the poor vetting of the employee hired.
It can't be a "counterfeit" if the planchet is genuine and the die strikes came from the U.S. Mint striking chamber Counterfeit means everything is fake. Planchet, strike, die, etc. Altered is a genuine coin that was purposely modified after it left the striking chamber. It is not that either. It is genuine, but unauthorized.
It appears they attempted to create a bonafide mint error. Quite frankly this is new territory for me. The nomenclature of the components are all authentic. Does this make it an error, assisted or machine? From my vantage point, if it is all machine it's an error. If it required human assistance (which this clearly needed) it is not an error at all but it is an attempt at a counterfeit error. Albeit a mint assisted counterfeit error like coin. I'm very sure there would be countless buyers with high bids should this item go on the market. I believe the novelty and uniqueness would drive interest.
In order for it to be a "counterfeit", it has to be an imitation of something that already exists. This monstrosity is not an error - either now, in the future or in the past. The mere concept of there being a counterfeit of something that doesn't and cannot exist is a fallacy. Stop calling it a counterfeit. I know what you are trying to say, but you should call it a manufactured or fake "error".
Again, the term "Mint-assisted error" SHOULD be all that needs to be said. (1) It was purposely created to be an error coin. (2) It was done without authorization by the U.S. Mint. (3) It was created at an actual Mint facility using the same resources the Mint uses to produce genuine coins. It is NOT counterfeit .