Assuming that one way or another the Democrats were aware of the tactic, and yet didn't take action to prevent it... why do you suppose that would have been?

One possible explanation that occurs to me - by no means the only one - is that they were hoping to get a little more mileage out of it themselves before they plugged that hole, maybe just before the 2008 elections. (Or alternately that they didn't want anybody looking too closely at the 2004 attack on Nader until a little more time had gone past.) Which is part of the problem with seeking to emulate the Republicans' ruthlessness, really.