Dealer mixes the Flop with muck cards

[Fiepoto]

Ok, so how would you guys handle this?

I'm playing a NL tournament over a buddy's place. Biggest tournament he has ever had, 25 people showed up for a $50 buy-in.

So I'm playing at one of the three tables, and there is a friend of a friend dealing who deals out the flop, turn and river all at once face down, before the the pre-flop action is over.

now, normally I would have said something, but I had just gotten back from a smoke break and the deed was already done.

Well, there is a hefty raise and one caller. Then someone else, not in the hand, mistakenly mixes the mucked cards with the burncards and pre-dealt hand.

Well, now quite a bit of a row begins. some people want to take all of the cards (mucked and dealt) and reshuffle. Others say to just deal a new flop off of the remaining deck (since no cards had been exposed). Finally, my friend who is running the thing says to just deal off the deck and check it down.

Of course, one guy has AK and the other K4. the guy with the K4 spikes his 4 on the turn to take down the pot, and the guy with AK is furious, saying there is no way he would have lost on the flop as he would have made a sizable c-bet.

Anyways, big big argument erupts...

Personally, I think they should have been able to pay the hand out using the remaing cards in the deck.

How would you guys handle this? And what rules could be put in place to prevent this kind of thing in the future?