I played at Turning Stone on Sat. I asked 2 dealers, and then the night manager and they all said it would be like exposed cards, show one show all, no delay. Dead hand if in a tournament. However, BK's comment makes sense to me. The house rule for the Thursday night game is that no one is supposed to show their cards because of problems like this in the past. But since it had been months since it was a problem and the kid wasn't the sharpest knife in the drawer it was glossed over. In retrospect, I think the house dealer should have killed the hand. The problem is that the house takes 'votes' on things all the time instead of ruling consistently. So, since no one at the table had a strong feeling on killing his hand because he was so short stacked he got the warning. I can see both sides better now.
I haven't bothered to read all the posts here, but something similar happened when I was at Luxor in a 1/2 game. I'm a bit unsure of how it actually went down so it's freely after my drunken memory.
Limp to MPish who raise to 10, fold to BTN who pushes all-in with 40, SB either calls or raises (I believe the latter), and BTN (being SBs girlfriend) shows her cards to SB thinking they were the only two left. The floor comes in and says that her hand is not dead because she's all-in and SB's call/raise was done before he saw the cards so if MP calls/raises, her cards will be shown to him as well. That way MP doesn't get an advantage and it seems pretty fair to me.