To me, honour in this game is to respect the rules, respect the other players (not CDing etc) and (maybe most importantly?) to play for the survival of your country - meaning: draw if necessary, win if collateral damage is affordable (^^) or take part in a winning alliance (in reference to the ongoing PPSC threads).
In a way though, I can understand the motives of MM not wanting to honour the backstab of himself. Why fight bravely against someone who just stabbed you? So they can enjoy the remaining (and uneven) fight? I believe the continued fighting makes the stabbing player feel less bad about a stab.
It's acually quite emotional to betray, stab and lie (or at least should be?). Sometimes your country is dependent upon you to do so in order to survive (ok megalomania), but it should be (at least in a press game) an action made with consideration and understanding that you ruin someone else's chances of surviving, possibly ruining their game (including gaming experience?)
Not wanting to honour another players stab is to me not dishonouring, it's just a part of the game, just as the stab itself. It's not an obligation for the stabbed player to judge if the stab was "rightful" or not, always having to accept righteous ones. A CD is always bad, but theres CDs for ingame reasons, other reasons, and CDs for no reason at all.
The stabber also must be aware of the seriosity of the action, maybe it is overly hopeful to think a stabbed player always should accept the betrayal? Why is it that we need the blessing of our stabbed mates to fully enjoy a win in Diplomacy?
Then again, even though I don't think it's necessarily dishonouring not to accept the stab, I think there's a great deal of honour in continued fighting, pursuing a draw or better. I guess what I'm after is, I am only responsible for my own gaming experience, not everybody elses. I can understand MMs reasoning, although I may not have acted the same way as he did. Or in a certain game maybe I would? As he says, he hasnt reacted the same way to every stab before..