lots of speculation and stories of fish behaving Oddly. However, I think it makes perfect sense that this fish rejected fake food. Additionally, having read severall books and publications on trout behavior (not to become an expert but to prevent getting skunked) I can tell you that the larger the fish the more calories it needs for the energy it expels to eat. Even though Jed has stated that he and his guide were catching 2 and three lb fish on No. 28 flies and severall others including myself have caught fairly large fish on small morsels. The trout cannot survive this way. It is more the exception than the rule. A large fish like this would be more likely to move for a sculpin or wooly bugger or clouser minnow than a dry fly as these imitations match the trout's required diet which by this stage is not often a "hatch". Additionally, the trout was in 3.5 feet of water and the predator was within 5 feet which is not exactly in the fish's blind spot. A natural behavior for the fish is to shut down and ignore you as many stated.

In answer to your first question, I believe that ths behavior is normal.