Because this situation is not explicitly covered in the rules, I can see why opinions will differ. I do agree that pots should not be split as a general rule -- we should always aim to award the pot to a winner. However, personally, between the two evils of splitting a side pot and digging into the muck for irretrievable hands that have not been tabled, I have to say that the former is the lesser evil IMO. The last thing that I want to do is dig through the muck for a hand that hasn't been seen by anyone at the table, and award a player with the "mystery" hand a pot. I don't want to be accused of (seemingly) awarding players for making a good guess at what cards are in the muck, or awarding the pot to a "favorite" player when all three contenders for the side pot are equally at fault. If we start digging in the muck for this reason, players will wonder why we can't do the same thing when, for example, their hand gets mucked through what is primarily the fault of someone other than themselves (e.g. dealer error).
In this particular situation, I also think that the chances that three players would collude to get their bets back from a side pot is extremely, extremely unlikely. The last person to "muck" always has the incentive to simply show his hand to win the whole side pot, and I think he would do so rather than muck for a split. I would prefer to split the side pot amongst the players eligible, and I see that as the fairest solution overall; if I truly suspected collusion, that is an independent issue and I could penalize or even disqualify all three for collusion.
I admit that I was a bit swayed in my ruling based on the comments I had previously read in this exact thread. My close second choice of action would probably be to simply remove the side pot from play (i.e. no one gets it). However, I don't think I could justify leaving the chips in the pot for the next deal, because that means players that were not even eligible for that last side pot could win it (and it could have been a significant side pot). The player who happens to have the strongest holding on the next, unrelated hand, would get a free bonus. If I was willing to allow someone that was not even contesting the side pot to receive a winfall, then why wouldn't it go to the main pot winner who actually was involved in the hand? But that doesn't seem fair either.
I don't find myself disagreeing with Stuart often, but I personally would consider his approach my last choice of potential options, in this particular fact scenario.
K