I don't see an underwater finish as being an argument against the
underwater fly as Misty Hyman is performing the stroke.
On other issues regarding timing:
There are ways to deal with the situation where the primary timing (a
touchpad in your example) and the button backup fail.
The rules require a mechanical (okay -- manually operated stop watch)
timing device for each lane which is actuated on the starting signal.
If that is the ONLY time available for the lane then the Referee uses that
time, along with data about the previous relationships between button
time, watch time, and touchpad time, to compute a time for the swimmer.
There's a good chunk of the USS rules (102.17.5 and 102.17.6) which deal
with these issues.
A more likely challenge happens when there's a wide dispersal in times.
Using a Colorado systems the times may come in like:
But 1 1:18.20
But 2 1:18.64
But 3 1:18.12
Which usually means the referee wanders out to the lane timers and asks
what may have happened (being friendly because these are, almost all the
time, volunteers who had to be cajoled down from the stands).
Also, the starter/referee do across the board order of finish judging and
those observations can be used to work with the times. And coaches
watches may also be used as guidance as well.
It's a BIG no-no to deprive an athlete of a time for a swim.