Just because the audience does not see Alan witness the molestation while editing the footage does not mean he did not see it. Yes, we know his job was to edit the 800,000+ hours of Bannister's data that is categorized by the Guillotine as it is downloaded from the implant. We see him edit something out. But remember these points:
1) It is clear that Thelma took "one look at the footage" before passing it off to Alan and it is clear that she saw enough to know it was creepy enough for Alan, most likely by looking into the "dirty" categories. So even though we don't see her look at the footage at all, we know she saw something. Just what she saw is open to as much interpretation as what Alan saw.
2) We do know that Alan's history is to view the darker subject matter, i.e., Monroe's domestic violence footage and all the macabre dirt he had on Ollie.
Stephanie sued to get the footage to protect her reputation because she knew what was going on with Isabel and it was not positive child-rearing. So there is no reason he would not look at it.
3) Listen to the Director's commentary on the DVD, especially over the scene of the private consult between Alan and Isabel. Naim reinforces the concept that Alan has beared witness to Isabel's plight, that he knows her secret and he reassures her it will be okay to remember her daddy in any way she wants to. Watch her reaction as she learns her father's implant is destroyed and as she watches Alan, the only other witness to the indiscretion, leave.
4) Yes, the film is from Alan's POV but that does not mean we are shown everything that Alan experiences (ex. the red paint). You can not definitively say that he never saw the molestation because it was absent from the mise-en-scene. Using your logic, no serial killer in a tasteful horror movie is truly a murderous monster because we do not see the knife plunging into screaming off-screen coeds.
5) Alan would not have run from Fletcher at the end of the movie when Fletcher says, "You have seen his life. It is encrypted on your implant." unless Alan saw something substantial. They could have always gone back to Hasan for another five minutes of live download and showed Fletcher what he saw while viewing Bannister's memories.
The movie ends on an open highly-subjective note, but the better ending would have been if there was no molestation whatsoever and it was revealed as a major red herring as Fletcher views Alan's footage of him editing Bannister's data. That Alan cut it because it was nothing. That Isabel was just a shy, weird little girl. That Jennifer was just a greedy, shrewish widow. That Bannister's implant was defective and the molestation was only his disturbed fantasy and never really happened. That Fletcher was completely misinformed and that it was a senseless killing from the beginning. But then that would have been a David Mamet film.
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