Charles,
Rules
Just as is the case with all written rules, there's "the letter of the law" and "the spirit of the law". The written form cannot account for all cases and always generalizes things, so there are countless gray areas. This is an inherent problem with the concept of written rules, which even professional judges deal with on a daily basis.
The site, above all, is supposed to be good. For a Q&A website, that means that it's supposed to be effective in providing people with answers to their questions. To that end, it should be active, focused and promote good answers and questions. All the mechanisms, principles, rules and recommendations are there to serve that single purpose, and they are secondary to it. So we (I believe that on this particular point I may speak for other mods too) feel that if a question contributes to this website even if it seems to contradict one of the answers in the FAQ, we should allow it. Note that the FAQ is phrased in very wide and cautious terms - "Questions that are extremely off topic, or of very low quality, may be removed at the discretion of the community and moderators." (emphasis mine).
Off-topics
You will, I hope, agree that UX in general is a very wide and multi-disciplinary field. So, often it can be very hard to decide whether a question is "really" off-topic. I don't think that SE websites are mutually exclusive. I see many questions that I personally would place on GD.SE, but I can see why they would also be relevant on UX. If the activity on such questions shows me that the community also recognizes it as relevant by upvoting and answering it, I don't see the benefit in removing it. I do see the harm in it (it's upsetting for the OP, and it takes down a question that the community is interested in). The best "objective" indication of a question's relevance to the website is the number of flags on it, and questions that are blatantly off-topic invariably produce 2-3 flags. I don't think you'll find many questions with multiple flags that weren't taken down or migrated. That's as opposed to questions which produce one flag and a couple of upvotes and answers. To me, that signals that one specific person perceives is as off-topic while other users don't see a problem with it.
Flag validity
And when a flag is marked valid, then the item being flagged should be acted upon
The answer to this one is going to be much shorter and less philosophic. When a mod handles a flag, there's the button of "no action required". Once pressed, it brings up the following dialog:

If you feel very strongly about the phrase I quoted, I believe Meta.SO is the place to bring this up.
Oh, and flags shouldn't be marked invalid when they are 100% valid just because the moderator "likes" the question.
I hope you'll agree that the question of "100% validity" is subjective, and your opinion on it isn't "more right" than anyone else's who's been around for any length of time. As to the mod liking the question - I, personally, do my best to judge by the community reaction as described above and to disregard my personal feelings about the question. I feel it's safe to assume that the other mods do the same.