A few things. First, average development from 2 to 3 is 3 points. Yes, that 8 was early in the year, but precocious horses generally develop less (as discussed re Ways And Means vs Thorpedo Anna).
Second, that Chili Flag race was a BIG problem, and I marked it for review. The choices were either to have the top three (all Chad) run new tops, or have them run their tops and the rest of the race totally collapse, which would be extremely unusual for grass stake horses. Additionally, doing it the other way would have meant adding a lot compared to the other two grass routes (though one was an S Pace race).
There’s a discussion to be had about why so many Derby runners don’t run their races, which I suspect will come up in Preakness conversations. But just to kick things off, compare the times of the first Derby half mile and the last half, and see how the horses that were anywhere near that half mile fraction ran. MD did better than most, and he still ran 3 points off his top.