On the damping piston, there should be a groove with an O ring in it under the piston seal. This keeps the piston centered in the bore. Without this O ring pushing out on the piston seal, as the seal wears, the piston can hit the walls of the shock body. This O ring has no real sealing function. Paul Thede calls it an "energizing" O ring.
Omitting the O ring from the piston is probably a cost saving measure, and insures that Progressive will have a shot at a replacement shock sale. Progressive is not in the racing market where this problem would come to light within the warranty period. Most people will probably throw the old one away and buy a new one. Think shocks for your car. Racers will change shock oil every couple of races, and replace wear parts while they are at it.
Cheers,
Doug